João Leão revealed that current forecasts point to a recovery of the economy to pre-pandemic levels sooner than expected, at the beginning of next year. The State Budget’s priority for 2022 will be dealing with the consequences of the economic crisis.
The impact of the pandemic on Portuguese public debt figures in the 30 billion of euros, with the possibility of the final bill still rising to 35 or 40 billion by the end of 2022.legacy of the debt crisis“, also warning about the long duration of this consequence.
No private sector, the debt estimate is also five billion euros: four billion euros concentrated in citizens and one billion in companies. Even so, the person responsible for the Finance portfolio rejects the hypothesis and the need for an amending budget.
about next State’s budget, stated that the document will prioritize dealing precisely with the legacy of the crisis and measures to consolidate the recovery, with a view to recovering GDP in 2022 to pre-pandemic levels.
For now, as Eco writes, the estimates that had been revealed in connection with the announcement of the Stability Program, in April, keep: the objective will be to lower the values to 128% of GDP in 2021 and 123% of GDP in 2022, thanks to the economic recovery that the minister foresees to be even greater than estimated.
“We are even convinced that let’s get over these estimates” he said, referring to the combined growth of 9% in 2021 and 2022. If confirmed, João Leão will reach the economic levels of the pre-pandemic sooner than expected, early next year.
To finance the recovery and support measures, the Portuguese government has more than three billion euros from the Recovery and Resilience Plan and other public investments that are expected to reach two million euros — 500 million more than this year.
“We cannot ignore the social impacts of the crisis, it is necessary to ensure that the most affected sectors will be helped“, he said and then enumerated priorities such as youth employment, health and education. “We are talking about investment in the railway, expansion of meters and investments in health that will be fundamental. That’s what explains part of the growth in the second quarter of this year.”
With regard to employment, the finance minister revealed that he wants to “help the most young to enter the labor market and ensure that the most affected sectors are helped in this recovery phase”. In the area of health, the priority will be to reinforce the non-covid-19 activity, which has to recover the unscheduled activity.
The ruler did not want to commit to the tax cut and changes in the IRS levels planned for before the pandemic, opting to highlight that the IRS decreased from 7.3% to 6.3% as a percentage of GDP — almost half the average in Europe, as the Observer reminds us. Still, João Leão ruled out the possibility of a tax increase and took a look at what comes next, in the post-pandemic period.
Changes in taxation can, however, happen in certain sectors. “Are necessary positive and negative investments and tax benefits in the environmental area that will be reflected in the budget proposal.”
From another angle, that of democracy, João Leão stated that one of the government’s wishes is to focus “on families with children” and see how “tax benefits and family allowances” work. The finance minister once again expressed a previously expressed intention of all families receive 600 euros per child until the end of the legislature, which may involve lowering taxes for those with more children or increasing allowances. In the case of families with a second child, the goal is for them to receive 900 euros until reaching 1500 euros for two children.
On the horizon is still a substantial rise in the minimum wage next year, which for the finance minister is also important for the income of the Portuguese.
The companies will also receive attention from the Government, which has set up a program, together with the bank to refinance the loans when the moratoria at the end of the month and an increase in funds for the recapitalization of companies and resources for Novo Banco is also planned.