Portuguese government expects a 3.2% deficit in 2022
João Leão revealed in meetings with the political parties that the government is projecting a 4.5% deficit this year and 3.2% in 2022.
The country’s deficit will continue to fall, approaching 3% next year. Finance Minister João Leão revealed in meetings with the political parties about the State Budget for 2022 (OE 2022) that, after a deficit of 4.5% of GDP this year, he is counting on a deficit of 3.2% of GDP in 2022. Debt is expected to reach 123% of GDP.
After the surplus in 2019, the pandemic has thrown the deficit to 5.7% of GDP in 2020, but with the recovery, there will be a reduction to 4.5% this year. And, according to revelations made by José Luís Ferreira, From the Ecologist Party (PEV), after meeting the Minister, it will fall again in 2022.
The Executive forecast is that next year it will be possible to achieve a deficit of 3.2%, already very close to the 3% limit, which, however, will remain on hold because of the pandemic. Thus, the deficit forecasts that will be included in the 2022 State Budget are the same as those of the April Stability Programme.
It should be recalled that the Stability and Growth Pact’s safeguard clause – which temporarily suspends the rules on budgetary discipline – was activated in March 2020, to allow the Member States to react quickly and adopt emergency measures to mitigate the unprecedented economic and social impact of the Covid-19 crisis.
In June this year, the European Commission confirmed that the fiscal discipline rules included in the SGP would continue to be temporarily suspended until the end of 2022, to allow member states to cope with the effects of the Covid-19 crisis. The Commission considered that the European economy will continue to need support next year as well, and therefore foresees the deactivation of the clause only in 2023.
This fall in the deficit takes place in a period of economic growth. José Luís Ferreira confirmed the numbers pointed out by the Portuguese Communist Party (PCP) regarding GDP, with António Costa’s government expecting a 4.6% growth this year and 5.5% in 2022. Public investment will increase by 30% because of the RPP, while the public debt will fall to 123%.
