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Portuguese parliament approves 2016 state budget

Xinhua, March 17, 2016 Adjust font size:

Portugal's parliament on Wednesday approved the government's state budget for 2016 with votes against by the center-right Social Democrat Party and the rightist CDS-PP which were ousted as a coalition government in November last year.

The Socialist Party, Left Bloc, Portuguese Communist Party and Green Party voted in favor.

Measures include gradually restoring civil workers' pay throughout the year, eliminating the obligation to pay Christmas bonuses across 12 months in the public sector, and a rise in indirect taxation -- namely tax on vehicles, petroleum products, and tobacco and alcohol.

Portugal's draft budget for 2016 was approved by the European Commission in early February, after the Socialist government accepted to raise indirect taxes in order to comply with EU budget rules.

The budget deficit will be cut to 2.2 percent of gross domestic product (GDP), after hitting 4.3 percent of GDP last year, and the GDP will be 1.8 percent.

The budget initially promised to cut the budget deficit to 2.6 percent but was modified after the European Union (EU) said it needed to be tighter.

Finance minister Mario Centeno on Wednesday said the budget plan was what the country needed, adding it was a "responsible alternative" and it was "time to give back hope to the Portuguese."

He also said at parliament that Portugal had been subjected to "blind austerity" for the past years, but added, "turning the page on austerity does not mean governing without restrictions."

The draft budget was supposed to be submitted to the EU by Oct. 15 last year but was delayed, due to the change in government, to Jan. 22 when it was deemed by the EU to be lacking sufficient measures. Portuguese parliament approved the draft budget on Feb. 23 and has since made numerous amendments to it.

Prime Minister and Socialist Party leader Antonio Costa toppled a Conservative minority government led by then Prime Minister Pedro Passos Coelho in November, forming an alliance with the Left Bloc and Portuguese Communist Party, vowing to turn the page on austerity.

The Socialist party has eased austerity after tough tax hikes and spending cuts which were imposed when the country signed a 78-billion-euro (87 billion U.S. dollar) bailout program in 2011, when the country was on the verge of bankruptcy.

Costa has promised to comply with fiscal discipline imposed by the EU, however the former Conservative coalition government has said the state budget is irresponsible and unrealistic, and doubts it will put the country back on track.

Costa has assured his party will not be heading for a Greek-style collapse, but investors have expressed concern regarding the country's political stability and rolling back spending cuts.

The government says the country's public debt, which currently stands at around 130 percent of GDP, will be 127 percent of GDP by the end of 2016. Endit