Luís Montenegro rebuffs central bank’s “exercise in projections”
Prime Minister Luís Montenegro has rebuffed the “exercise” carried out by Portugal’s central bank which ‘warned’ yesterday of the country slipping back into the red following various populist measures recently approved.
Without commenting on the warning given by the bank – led by former Socialist finance minister Mário Centeno – the head of the AD centre-right government stressed: “We have the situation completely under control”. The executive will “ensure compliance” with the targets it has set itself, he told party faithful in one of the final rallies ahead of tomorrow’s European elections.
Expresso carried a long text on the possibility of government overspending, using the headline: “Public accounts on the road to the red.
“If everything that has been presented in the last few months was approved, Portugal could be very close to entering into deficit this year, and in the red by 2025”, the text continued, suggesting “President Marcelo is aware” and that even PSD MPs have been “alerted to the degradation of public accounts” over the last four months.
Essentially, the risks of ‘overspending’ come in the tax benefits for the under-35s; the increase in the Solidarity Complement for the Elderly; the abolition of tolls on former SCUT highways (a measure ‘forced through by PS Socialists in unison with CHEGA), and salary revisions for various public sector workers, namely police/ teachers/ doctors/ justice officials
The reality is that the government has already committed to increasing spending by around €540 million this year, and by almost €2 billion next – yet the 2025 State Budget has not even been drafted, let alone approved – and salary revisions are still in a state of flux.
If Portugal were to follow the path traced by the Bank of Portugal’s projections, the risk explained is that the country could end up ‘failing’ to comply with European budgetary rules.
This would be a bitter backwards step, bearing in mind 2023 saw the Socialist government claim an historic budgetary surplus (which then rapidly shrank due to measures approved post election defeat). But there is a long way to go yet – and Mr Montenegro has wasted no time in insisting that his government has ‘everything under control’.
