PORTUGAL TARGETS A HISTORICALLY LOW DEFICIT IN 2019

Portugal's Socialist government pledged on Tuesday to achieve the lowest budget deficit in its history in 2019, while increasing the pay of its civil servants and providing transport subsidies for families.

In its draft budget, the government has set itself the target of a deficit representing 0.2% of gross domestic product, (GDP), compared with 0.7% expected this year, and hopes to achieve economic growth of 2.2%, just slightly less than this year.

It also forecasts an unemployment rate of 6.3% next year, compared with 6.9% in 2018.

"It's a good budget that follows the road we've traced so far, of more growth, more jobs and more equality," said Prime Minister Antonio Costa on Twitter.

The Portuguese economy has rebounded strongly over the past three years since the Socialists came to power after the debt crisis in 2011, thanks to a rebound in exports, increased foreign investment and a surge in tourism and real estate.

The government's draft budget for 2019 includes transport subsidies for families living in the Lisbon and Porto regions, home to almost half of Portugal's population.

The plan also provides for the first unblocking of career advancement for civil servants since 2009, with pay rises and promotions to follow. Retirement pensions should also rise by more than inflation in 2019.

Portugal's debt-to-GDP ratio should fall to 118.5% next year, from 121.2% in 2018, the government's draft budget also shows.

The Minister of Finance Mario Centeno presented this draft budget to Parliament just before midnight on Monday. He is scheduled to hold a press conference on Tuesday morning to provide more details.

Moody's announced on Friday that it was upgrading Portugal's credit rating to Baa3 with a stable outlook.

Growth supports are strengthening and the structure of external debt is improving, making Portugal's economy more resilient, the rating agency points out.