The Minister of Finance forecasts a loss of revenue of 10 billion euros in 2020. Nevertheless, the solution for the moment is the opposite of austerity.
Mário Centeno considers that the government is providing an adequate response to the crisis by not applying austerity, but admits that the future depends on the duration of the recession and the level of indebtedness of each country. Although he does not make any forecasts, the finance minister expects a 10 billion euro reduction in public revenue.
“Right now, we are doing the opposite of austerity,” Mário Centeno said Tuesday in an interview with TSF, noting that there are no spending cuts or tax increases in this recessionary period.
On the contrary, in addition to the measures related to the pandemic, the government is letting the automatic stabilisers work, which should imply a loss of 0 billion euros in public revenue (a drop of more than 10% compared to 2019). The reduction in public revenue, due to the fall in economic activity, is expected to have a greater impact on the budget deficit than the higher public spending of the State due to the pandemic, according to Centeno.
Although the solution is not now the austerity, it is not clear that it will remain that way. The Finance Minister admitted that this “depends a lot on the more or less temporary character of this recession” and on the public debt of each country, which is a “constraint”. However, Centeno made a point of pointing out that, according to European Commission forecasts, Portugal’s public debt should rise to 131.6% of GDP in 2020, a level similar to that of 2016. “We’re not going into territory that we don’t know about,” he said.