Live news: Portugal says cost-of-living support program won’t affect deficit targets

© Reuters

Portugal said a “cautious” €2.4 billion package of tax cuts and one-off payments to shield families from the impact of soaring inflation and energy prices would not affect the country’s deficit, debt or growth targets.

Finance Minister Fernando Medina said Portugal was on track for economic growth of 6.4% this year, one of the highest levels in the EU, and would reduce its budget deficit to 1 .9% of gross domestic product and its public debt at less than 120%. of GDP.

Fiscal prudence, he said, was “the best strategy to defend families and businesses”.

Medina detailed the measures announced by Prime Minister António Costa on Thursday evening, including a reduction in the value added tax on electricity to 6% from 13%.

Each working-age person earning up to €2,700 a month, twice the average salary in Portugal, is also due to receive a one-off payment of €125 in October, plus €50 for each son or daughter under the age of 24. year.

State pensioners will receive a one-time additional payment equivalent to half of their monthly pension. Rent increases in 2023 will be capped at 2%, Costa said, and landlords will be compensated with tax cuts. The price of monthly public transport subscriptions and rail fares will be frozen at the current level until 2024, he added.

The new package brings to just over 4 billion euros the support that Costa’s centre-left government has allocated to alleviate the impact of the cost of living crisis on families since the invasion of Ukraine by Russian President Vladimir Putin in February.

Inflation in Portugal fell slightly to 9% in August from 9.1% in July, the highest level since 1992. This was the first slight drop in consumer prices for more than a year.