The Minister of Finance said, this Tuesday, that the decision of the President of the Republic is unconstitutional and “sets a very serious precedent”, but that it will “Try to fit” the rise in social support in the current State Budget, and there is no need for an Amending for now.
Interviewed on the program “Tudo é Economia”, from RTP3, João Leão he stated that the Government has not yet decided whether or not to send the diplomas on social support promulgated by Marcelo Rebelo de Sousa to the Constitutional Court.
“The Government is evaluating what is the decision that you are going to make ”, said the Minister of Finance, adding that“ it is a procedure that has to be evaluated with great consideration and responsibility by all ”.
“More than the goodness or merit and financial impact of the measure, what is at stake is a principle of violation of a rule of the Constitution. It is a procedure that has to be evaluated with great care and responsibility by all, because it is violating a rule of the Constitution that serves to guarantee the financial stability of the State, in our opinion sets a very serious precedent“, He stressed.
“The Assembly of the Republic approves the State Budget. The Government is responsible for executing the Budget during the year. That’s it enshrined in the Constitution. In order to ensure that during the execution of the Budget, the Assembly of the Republic does not dismantle it, or does not cause the Budget it has approved to be exceeded, there is a rule called the ‘brake law’, very important to ensure that no financial slippage occurs ”, Explained the government official.
Even if he sends the changes to the Constitutional, the Executive will have to materialize the decision, which will have an additional expense of 40 million euros per month, and, therefore, Leão declared that will “try to frame it within the Social Security Budget ”, eliminating, for now, the need for an amendment.
“At the moment, we do not see, for now, the need to make an Amending Budget,” said the minister, adding that, “if there is a need for new measures because of confinement”, your answer may be different.
The minister took the opportunity to reinforce: “The most important thing here is the precedent that is created. Constitutions are very important and it is with good constitutions that countries achieve good policies and promote their growth. ”
Novo Banco will receive “value significantly below”
In the same interview, the person responsible for the Finance portfolio guaranteed that the transfer to Novo Banco will be made, but that the final amount will be “significantly below the forecast” in the State Budget.
Last Friday, the bank announced that it would ask plus almost 600 million euros to the Resolution Fund, with at least 160 million who are in doubt due to differences with public authorities.
Discounting that amount, the injection may be around 440 million euros, but the minister’s words suggest that the difference may be even greater. Despite this, João Leão wanted to make it clear that this financing will come from the financial sector, without involving budget funds.
The 2021 deficit is expected to be between 4.5% and 5% of GDP
João Leão also estimated that the negative balance of public accounts this year, to be presented in the Stability Pact in April, will be between 4.5% and 5% of GDP, above the current forecast of 4.3%.
Starting by saying that “it was only at the time of the Stability Program” that the Government would reveal its forecasts, he ended up saying, when directly asked if the deficit will be in the range between 4.5% and 5%, that “yes, it could be in that interval ”.
As for economic growth, and the minister said earlier that the Government would revise its forecasts downwards, “mainly because of the effect of the pandemic in the first quarter”.
“We have, on the one hand, the effect of vaccines, which both Portugal and the European Commission, which also makes this prediction, that in the second half we will have a very strong recovery of the economy, and we will have a program focused on the economic and social recovery from the crisis, both for 2021 and 2022 ″, he said.
The Government’s current estimate points to an economic growth of 5.4% this year, which will be downgraded by “more than one point” percentage.
“The downward revision this year will lead, as a very strong recovery of the economy is expected in the second half, will imply that both from the second half and from 2022, the economy will grow more than expected,” he said. .
Leão predicts that the 2022 recovery will mean that the economy can already surpass “the value before the pandemic”, being “Significantly above the value of 2019”.
To this end, the Government relies on the “very strong momentum” of the Recovery and Resilience Plan (PRR), currently under analysis by the Community Executive, as well as with “other very important investments”, in a program “centered on economic and social recovery” .
The minister also ruled out any tax increases after the pandemic, considering that this is a “wrong way” to finance the measures taken.
João Leão concluded the interview saying that he believes that “there are political conditions” to approve the State Budget of 2022, “with an even broader majority than in the previous year”.