Finance minister expects negative, positive risks for accounts

  • Lusa
  • 12 November 2020

Portugal's finance minister, João Leão, acknowledged that there are several negative and positive risks to the macroeconomic scenario envisaged in the proposed 2021 budget.

Portugal’s finance minister, João Leão, acknowledged on Thursday that there are several negative and positive risks to the macroeconomic scenario envisaged in the proposed 2021 budget, which could have an impact on public accounts.

He acknowledged that this risk “naturally has consequences for the public accounts”, and it is not possible to “predict exactly what it will be”, he said, in response to PSD member of parliament Jorge Paulo Oliveira.

Oliveira also asked the minister about the tax payments that companies would have to make next year, relating to both 2020 and 2021.

Leão replied that “the taxes that have been deferred this year have been deferred within the year itself,” and that “the only companies that will have to pay, next year, IRC or payments on account, are the companies that have made profits this year,” as they are “the least affected by the crisis.

In his opening statement, the minister also said that the ‘IVAucher’ [VAT rebate for consumers of various services)would only come into force “to the extent that the pandemic is under control.

On Friday, the deputy secretary of state for tax affairs had said that “the ‘IVAucher’ should be implemented when the pandemic permits”, pointing out that the measure should be based not on quarters of the year, but 12 week periods.

‘IVAucher’ is one of the measures in the 2021 budget proposal which aims to stimulate consumption in the sectors most affected by the pandemic, namely catering, housing and culture, by allowing consumers to accumulate the VAT paid in these same sectors, discounting it for subsequent purchases, at discounts of around 50%.

In total, the government expects the measure to allow taxpayers to accumulate (and spend), through VAT, a credit of around €200 million.

The proposed 2021 budget foresees a recession of 8.5% this year and that the economy will grow by 5.4% in 2021 and 3.4% in 2022, “a year in which a level of GDP equivalent to that recorded in the pre-crisis pandemic period is reached”.

According to the budget proposal, Portugal will also comply again in 2022 with the rules imposed by Brussels on the budget deficit, which is expected to reach 7.3% of GDP in 2020, 4.3% in 2021 and 2.8% in 2022.

The government estimates that the government debt ratio will improve in 2021 to 130.9% of GDP, from 134.8% in 2020.

Unemployment is expected to rise to 8.7% this year, falling to 8.2% in 2021.