“This is the first State Budget endorsed by the Portuguese”, declared the leader of the executive, in an allusion to the political crisis opened with the failure of the previous budget proposal and the subsequent early legislative elections that the PS won with an absolute majority.

António Costa completely ruled out the possibility of the country returning to coal as a response to the current energy crisis and defended the goals contained in the Government's 2022 State Budget proposal, which will be discussed in general in parliament on the 28th and 29th.

Not a temporary budget

On the issue of the State Budget, António Costa refused the prospect of being a proposal for six months, countering that several of the measures will have retroactive effects to January 1, and considered it natural for opposition forces to criticise it.

“We made a commitment that, once elected, we would present exactly the same budget, which is the original, but already incorporating all the commitments we had made in negotiations with the PCP - and, despite this, the PCP kept its negative vote”.

António Costa later maintained that the budget proposal will “significantly reinforce the income, from the outset of all pensioners up to 1,108 euros, which will have an extraordinary increase” and that it will be paid retroactively from January 1st.

Good forecast

Regarding the fact that the main international institutions estimate for Portugal a growth level lower than that foreseen in the budget proposal, António Costa countered that “the starting point” for this year’s budget execution “is much better than that which was foreseen”.

“The forecast deficit was 4.3% and it was 1.9%. The starting point is frankly better. So in June we will start preparing the Budget for next year,” he said.

With regard to the phenomenon of inflation, the leader of the executive cited the forecasts of the International Monetary Fund (IMF) that “reaffirmed that we are currently experiencing an extraordinary peak of inflation, which will not continue”.

“Inflation is forecast at 4% in Portugal and for 2023 [the IMF] estimates 1.5%, that is, a very significant drop already next year. There are other less optimistic institutions, but the European Central Bank (ECB) points to the same trajectory, understanding that we will tend to stabilise in the eurozone with an inflation of around 2% ”, he claimed.

“In spite of everything, we are the third or fourth country in the European Union with lower inflation thanks precisely to energy policy and the measures taken in October to control the rise in prices. In the coming months, we have to take a very strong action on the price formation process. In this sense, I hope that this Friday the Assembly of the Republic will already approve the reduction of the Tax on Petroleum Products (ISP) by an amount equivalent to what was intended to be reduced in VAT ”, he said.

No return to coal

António Costa also considered it essential that the proposal by Portugal and Spain, to avoid contamination of the price of electricity by that of gas, be approved by the European Commission soon.

“But it would be absurd to go back to coal. Portugal has to accelerate the energy transition”, he added.