LISBON (Reuters) – Portugal’s Socialist Prime Minister Antonio Costa goals to retain energy at Sunday’s parliamentary election with a pledge that appears like an unlikely vote-winner for western Europe’s poorest nation – no backtracking on tight spending controls.
As populist governments throughout the remainder of Europe look to ramp up spending amid fears of recession, Costa has campaigned for fiscal self-discipline to protect the hard-won outcomes of austerity imposed within the wake of Portugal’s 2011 debt disaster.
And the technique seems to be working. The middle-left Socialists are properly forward in opinion polls after recording the bottom funds deficit within the 45 years of Portugal’s democratic historical past. And the financial system is on the right track to develop 1.9% this yr, above the EU common.
“Maybe it’s finest for the austerity to not finish fully, or we run the chance of going overboard as occurred earlier than the disaster,” stated Nuno Almeida, 31, a karate instructor within the city of Barreiro, south of Lisbon.
Almeida, who has a second job in a publishing home, stated he plans to vote for the Socialists as a result of they “steadiness out self-discipline and progress”.
“Folks don’t need to undergo the struggling once more and at the moment are rather more lucid about deficits and the funds,” stated Almeida, whose livelihood was hit when he misplaced a lot of his fee-paying pupils in the course of the 2011-14 disaster.
Whereas Costa’s authorities declared in 2016 that it had “turned the web page on austerity” by reversing some pay cuts and tax hikes imposed by the earlier administration, it has since turn out to be extra frugal. It has refused to lift salaries for lecturers and civil servants, whereas the whole tax burden reached a document excessive 35.four% of GDP in 2018.
Even with wages largely caught at pre-crisis ranges of just about a decade in the past, odd individuals say they’ve felt enhancements currently.
“Throughout the disaster, so much was taken from us,” stated Pedro Campos, a tram driver on Lisbon’s Route 28 which is in style with vacationers. “Our wage returned to what it was earlier than the disaster … I imagine the nation will proceed to evolve.”
Tourism is Portugal’s main income and has helped its restoration.
Finance minister Mario Centeno, who can be chairman of the Eurogroup of euro zone finance ministers, now guarantees a small funds surplus subsequent yr, however so does the primary opposition center-right social gathering PSD, which may make potential post-election agreements simpler. The Socialists are nonetheless unlikely to win an outright majority however are anticipated to extend their variety of seats in parliament.
In an indication that Centeno’s tenure has turn out to be a normal for sound fiscal and financial insurance policies, PSD chief Rui Rio informed Costa in a latest debate: “I even have my very own Mario Centeno”.
Any deviation from the deficit-busting course is politically dangerous, as Rio is aware of from the European elections in Could, when PSD suffered its worst-ever consequence, capturing simply 22% of the vote.
Simply forward of these elections, Costa had accused PSD of compromising fiscal stability when PSD briefly sided with the far-left in backing a invoice that will have raised lecturers’ wages. The invoice was by no means authorised.
“The massive irony of this election … and the large issue for the suitable is that they’ve misplaced the banner of funds steadiness and the Socialists have raised it,” stated political analyst Antonio Costa Pinto. “The middle-right and the center-left respect these values, and that’s the majority of the citizens.”
Even the far-left events have contributed to the deficit-cutting insurance policies, serving to to approve all 4 annual budgets regardless of blaming underfunded public healthcare and schooling on Centeno’s “obsession with the deficit”.
Centeno rejects such claims, arguing that public spending is rising, if at a tempo properly under that of revenues, however is disciplined.
“Portugal’s back-and-forth erratic public funding coverage is a factor of the previous now,” Centeno stated this week, as the federal government now solely proceeds with viable funding initiatives which have assured financing.
In January-August, authorities spending rose 2.7% from a yr earlier whereas revenues have been up four.6%. And though the federal government budgeted for a 31% improve in public funding this yr to 2.1% of GDP – nonetheless one of many lowest ranges within the EU – it rose by simply three% within the first seven months.
Writing by Andrei Khalip; Modifying by Susan Fenton