The Government of the Portuguese economic miracle has run out of time. Tensions in the coalition executive – made up of socialists and the extreme left – have ended up exploding this week. The partners of the prime minister, António Costa, have knocked down some fundamental budgets in full recovery path after the coronavirus crisis, despite Costa’s own attempts to avoid this outcome.
With Costa himself not intending to resign, the Government of Portugal called for order, claiming that he has “full functions” to continue taking measures until the president, Marcelo Rebelo de Sousa, confirms the foreseeable advancement of the parliamentary elections . And that decision will not be made before November 3, the date on which a meeting of the Portuguese Council of State is scheduled. The beginning of 2022 will be marked by the elections in Portugal after this crisis of socialism.
Given the refusal of the Budgets , the Executive of the Coast has two months of maneuvering in the Public Treasury , with the State accounts for 2021 approved. For an expected start to the year 2022 without a government, Costa would only have one twelfth of the budget corresponding to 2021.
The current Portuguese Prime Minister, António Costa, affirms that he will remain in the political race for the presidency. However, before this bump , the polls leave the prime minister with a victory without an absolute majority for the Socialist Party of Portugal (PS). In this scenario, the right could be the great beneficiary.
The prime minister wants “a reinforced majority” , which would increase the current 108 deputies and even reach the 116 that would grant him an absolute majority. In the current legislature, the PS had been supporting the 19 of the BE and the ten of the PCP, in the face of an opposition that could not offer any kind of political alternative.
The polls published in recent months by the Portuguese media, however, place the PS in a range of voting intention similar to that of 2019, when it achieved 39 percent of the vote. The last tangible trial, the local elections in September, kept the Socialists slightly below this percentage, although they left some signs of wear and tear such as the loss of the Lisbon mayor’s office, which Costa himself held in 2007 and 2015.
Miracle in the country of fashion
It is the country of fashion. Both investors and tourists have put the eye in Portugal in recent years. Before the arrival of the coronavirus crisis, the country had growth in line with the euro zone countries, at 1.9% year- on- year for the last year before the pandemic crisis and an unemployment rate of the lowest in the environment, at 6.3%. With these data, it earned the respect of its international partners.
It is not surprising that the Government that made this economic miracle possible repeated after the elections of October 6, 2019. Prime Minister Antonio Costa, leader of the Socialist Party of Portugal (PS) won the legislative elections and reissued the left-wing pact of the last few years, now broken and on the tightrope.
In 2018, exports in Portugal grew by 5.34% compared to the previous year, these sales abroad representing 28.75% of its GDP – most of them are destined firstly to Spain, France and Germany, which represent 26.03, 13.01 and 11.78% of the total, respectively. In other words, almost a third of the country’s wealth is generated in this way . At the same time, imports from Portugal grew 7.67% compared to the previous year.
Until the second quarter of 2019, the balance reported by the country’s statistical office showed a testimonial surplus of 0.2%. But the evolution of the gap between income and expenses of the entire public sector of the neighboring country is even a mirror to look at for the Government of Spain since the calculation at the end of last year, with a deficit of 0.5%, is The result of a set of measures adopted since the destruction of the productive fabric caused by the 2008 crisis.
Precisely after the financial crisis, Portugal had to adjust to the measures of the European Commission (EC), the International Monetary Fund (IMF) and the European Central Bank (ECB) to request and receive a European bailout of 78,000 million euros. The era of austerity began prior to economic expansion . Between 2011 and 2013, the Social Democratic Party (PSD) managed to save 7 points of GDP in expenses and improve collection by more than 3%.
The fiscal deficit went from 11% of GDP in 2010 to 0.5% in 2018, while the primary balance -without counting interest on the debt- will be the highest since 1992. This improvement in the imbalance in the accounts Public debt has allowed public debt to go from 133 of GDP to 124% , according to the latest data from Eurostat, the statistical office belonging to the European Commission.
Attraction of investors
In 2009, the Portuguese government, with the intention of attracting foreign investment and attracting qualified professionals, foreign pensioners and individuals with high net worth to the country, created the Regime for Non-Habitual Residents.
To benefit from this privileged treatment, the foreign citizen must prove that he has not been a tax resident in Portugal in the last 5 years and acquire tax residence in Portugal. The general Portuguese rule is that those who reside in the country more than 183 days a year can acquire tax residence or, with a shorter period of time, have a home that serves the Treasury all year long, presuming the intention of keeping it and occupying it as habitual residence.