Tags: EU | Portugal | Austerity

Portugal's Post-bailout Spending Plan Earns Cheers and Jeers

Monday, 22 February 2016 01:20 PM EST

LISBON, Portugal (AP) — Portugal's prime minister said Monday his center-left government's spending plan is scrapping austerity and restoring hope after years of hardship, but his opponents said he is being reckless with the eurozone country's finances.

Socialist Prime Minister Antonio Costa told the Portuguese Parliament his state budget will abide by the fiscal rules of eurozone membership while "proving there are always other ways of doing things."

Parliament was holding a two-day debate on the 2016 budget, delayed by a change of government at the end of last year. Its approval in a final vote was ensured by the majority of seats held by the Socialist and their allies, the Communist Party and radical Left Bloc.

Costa said he intended to strengthen the feeble economy by increasing disposable income that in turn will spur consumption, firing growth.

Among his anti-austerity measures are restoring government workers' pay that was reduced, cutting taxes for low-income families, increasing the lowest pensions, and bringing back four public holidays. The government has also approved a return to the civil servants' traditional 35-hour working week, down from the current 40 hours, and is cutting the sales tax on restaurant meals to 13 percent from 23 percent.

For businesses, Costa promised to cut red tape, help their recapitalization efforts, and ensure swifter distribution of European Union funds for development.

Portugal introduced austerity after needing a 78 billion-euro ($86 billion) bailout in 2011. It is still one of Europe's most indebted countries, with government debt at 129 percent of GDP. That is forecast to drop to 127.7 percent this year.

The budget also predicts economic growth of 1.8 percent, up from 1.5 percent last year. The government reckons the budget deficit will fall to 2.2 percent from 3.1 percent.

The leader of the previous center-right government, which lost power in November, said the current administration is behaving "like a pyromaniac" by ditching austerity and embarking on new spending while the country remains deep in debt.

Pedros Passos Coelho, head of the main opposition Social Democratic Party, said the Socialist government "is pouring gasoline on the fire instead of protecting the Portuguese."

European officials have also expressed concern about Portugal's new path, saying some of the government's forecasts appear too optimistic.

© Copyright 2026 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


Europe
Portugal's prime minister said Monday his center-left government's spending plan is scrapping austerity and restoring hope after years of hardship, but his opponents said he is being reckless with the eurozone country's finances.Socialist Prime Minister Antonio Costa told...
EU,Portugal,Austerity
372
2016-20-22
Monday, 22 February 2016 01:20 PM
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