Portugal's PM says focus on growth, deficit despite Ukraine war

By Sergio Goncalves

LISBON – Portugal’s Prime Minister Antonio Costa was sworn in for a 3rd time period on Wednesday, promising to keep up the tempo of financial progress with the usage of EU funds and additional slash the finances deficit regardless of the challenges created by the warfare in Ukraine.

Costa’s centre-left Socialists received an outright parliamentary majority in a snap election on Jan. 30, after heading a minority authorities for greater than six years.

The Portuguese prime minister can now give attention to making use of the 52 billion euros of European Union funds at his authorities’s disposal till 2027, together with 16.6 billion euros from the pandemic restoration package deal. Costa referred to as the scenario “a novel alternative” whereas acknowledging that Russia’s invasion of Ukraine had difficult the outlook.

“This warfare provides an enormous issue of uncertainty … however we now have not given up on the aims of progress we authorised and of pursuing the trail of finances stability and the sustained discount of the general public debt,” Costa stated in his inauguration speech in Lisbon.

The federal government has forecast 5% financial progress this yr, according to the 4.9% registered in 2021, when the financial system bounced again from an 8.4% pandemic-induced contraction a yr earlier.

Portugal’s finances deficit is anticipated to slender to 1.9% of gross home product this yr from 2.8% in 2021 after which regularly drop to zero in 4 years.

Nonetheless, with the warfare in Ukraine additional clouding the nation’s exterior demand and elevating power costs, Costa’s authorities acknowledges that progress this yr might sluggish to three.8%.

“The subsequent few years received’t be as straightforward as Costa may need thought a number of months in the past,” stated Paulo Rosa, senior economist at Banco Carregosa, pointing to a probable additional rise in power prices and inflation in addition to euro zone rates of interest.

“On this context, if progress is anemic, maybe lower than 3%, it will likely be tougher to consolidate public accounts” within the face of the nation’s large public debt – 127.4% of GDP in 2021, Rosa stated.