Portugal’s Left Bloc says budget talks smooth, sees deal

"We are getting towards a deal on important matters," said the Left Bloc's Catarina Martins. [Pedro Ribeiro Simões/Flickr]

Portugal’s budget negotiations between the minority Socialist government and its left-wing backers in parliament are heading towards a deal that would involve providing more income to pensioners, the leader of the Left Bloc said on Tuesday (13 September).

The government, which has promised the European Commission it would keep cutting the budget deficit even as it reverses many of the austerity measures of the previous administration, has to present a draft budget by mid-October.

Some analysts have expressed concern that after pressure from Brussels for more fiscal consolidation, the new budget would split Portugal’s first-ever alliance of the centre-left Socialists with the hard left that began in November.

Political instability could also exacerbate investor worries about Portugal’s faltering growth and its credit ratings.

Spain and Portugal pledge new measures to avoid EU deficit fines

Both Spain and Portugal have submitted their arguments to the European Commission in a bid to avoid penalties for breaching the fiscal rules, expected to be announced on 27 July.

But so far, all signs indicate a smooth budget process. The Left Bloc’s Catarina Martins has signalled no outright challenge to the course of budget consolidation if the government agrees to increase pensions, especially for low-income pensioners.

“We are getting towards a deal on important matters and that gives us some confidence about the possibility of a budget that would correspond to the agreement that we’ve had” on parliamentary support for the government, she said.

Martins spoke to reporters after meeting Prime Minister Antonio Costa. The Communist party, whose support is also crucial to ensure the parliamentary majority, has yet to comment.

She singled out pensions as the most acute issue because retirees have so far only lost income in recent years. She also wants to end a crisis-time income tax surcharge, which has already been scaled down in this year’s budget.

“Considering the low pensions, the poverty among the elderly, the recovery of pensioners’ incomes has to be a priority,” she said, adding that although there were differences with the government on various matters, the parties were working to bridge them.

Commission split on credibility of rules as Spain and Portugal get ‘pardon’

A strong group of commissioners was in favour on Wednesday (27 July) of imposing at least a symbolic fine on Spain and Portugal for breaching the Stability and Growth Pact, but Jean-Claude Juncker opted for a zero penalty – supported by German Finance Minister Wolfgang Schauble.


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