The Portuguese economy is expected to return to pre-pandemic wealth in 2022, with an expansion of 5.5 % helping to reduce the budget deficit to 3.2 % of GDP and the public debt ratio to 122.8 %.
Portuguese state budget 2022 in 10 points
In the Portuguese State Budget 2022 (OE2022) proposal, presented to the Assembly of the Republic on Monday, the government also forecasts that the economy will grow by 4.8 % this year - an upward revision of the 4 % forecast in the stability program published in April.
The Minister of Finance, headed by João Leão, stated that "this development is largely due to the significant acceleration in investment compared to the previous year. 2021 and exports.
According to the budget proposal, the public deficit should fall to 4.3 % of GDP in 2021, before declining to 3.2 % next year, a projection that remains unchanged from the stability program.
The improvement is "the result of the gradual recovery in economic activity, the impetus for reforms and investments to be implemented under the RRP, income support measures for the middle class, families and young people, and the reduction in costs associated with the emergency measures that had to be implemented at the height of the pandemic crisis to support employment and income," reads the budget proposal.
Public debt ratio to improve also in 2021representing 126.9 % of GDP, after reaching a record 133.7 % in 2020.
The recovery from the recession resulting from the pandemic is also expected to continue in the labor market, with the government forecasting a fall in the unemployment rate to 6.5 % in 2022, the lowest figure since 2003, compared with 6.8 % estimated for this year.
In the field of taxation, the government wants to create two new levels of the IRS, deploying the 3rd and 6th levels, this tax having nine levels.
The government explained that it would implement "an ambitious program to improve household income through an IRS program that integrates various measures aimed at the middle class, families with children and young people, and a significant increase in family allowances".
Taken together, this program has an impact of 375 million euros, of which around 275 million already in 2022.
To stimulate private investment, the executive wants to launch the Recovery Tax Incentive (RTI) in the first half of 2022, allowing companies to deduct from the IRC collection the amount of investments they make up to a maximum of five million euros.
The Portuguese state budget for 2022 should be debated and voted on by the end of October. It will then have to be validated by the President of the Republic, and finally by the EU.
