© Reuters
Portugal said a “prudent” 2.4 billion euro package of tax cuts and one-off payments to protect families from the impact of rising inflation and energy prices would not affect deficit, debt or growth targets of the country.
Finance Minister Fernando Medina said Portugal was on track for economic growth of 6.4% this year, one of the highest in the EU, and would reduce its budget deficit to 1.9% of GDP gross domestic product and public debt below 120% of GDP.
Fiscal prudence, he said, is “the best strategy to defend families and companies”.
Medina detailed the measures announced by Prime Minister António Costa on Thursday night, including a reduction in the value-added tax on electricity from 13% to 6%.
All people of working age who earn up to 2,700 euros a month, double the average salary in Portugal, must also receive a one-off payment of 125 euros in October, plus 50 euros for each son or daughter up to 24 years
State pensioners will receive a single extra payment worth half their monthly pension. Rent increases in 2023 will be limited to 2 percent, Costa said, and landlords will compensate through tax cuts. The price of monthly public transport passes and rail fares will be frozen at their current level until 2024, he added.
The new package is just over €4 billion in support that Costa’s centre-left government has earmarked to ease the impact of the cost of living crisis on families since the Russian president’s invasion of Ukraine Vladimir Putin in February.
Inflation in Portugal eased slightly to 9 percent in August from 9.1 percent in July, the highest level since 1992. It was the first slight fall in consumer prices in more than a year.