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LISBON (Reuters) – Portugal\\\’s parliament approved in the first reading on Wednesday a supplementary budget that increases spending by 4.3 billion euros ($4.8 billion) to help the coronavirus-battered economy.
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The draft includes 1.6 billion euros for a new furlough scheme, maintaining jobs and employment training, as well as tax discounts and delays for companies pursuing investments or particularly hard-hit by the crisis.
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Most opposition parties, including the centre-right PSD and the left-wing Left Bloc, abstained, allowing the minority Socialist government\\\’s plan to sail through supported just by the 108-strong Socialist bench in the 230-seat house.
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The final vote will be on July 3.
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“We have truly faced exceptional times. This budget intends to respond to the impact of a health crisis which caused an unprecedented economic and social crisis,” Finance Minister Joao Leao, who took over on Monday after the resignation of Mario Centeno, told parliament.
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The pandemic created an 8.7 billion-euro hole in public revenue, Leao said, after stating last week that the government expected a 6.3% deficit in 2020 and an increase of public debt to 134.4% of gross domestic product in 2020 from last year\\\’s 117.7%..
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Leao assured the Portuguese, wary of a new wave of austerity after a painful fiscal adjustment in 2011-14 under the terms of an international bailout, that the supplementary budget would not be financed by an increase in taxes.
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The plan allocates an extra 500 million euros to the national health service, and will also loosen debt ceilings for local governments and public companies. A 1.2 billion-euro rescue loan for airline TAP, already approved by the European Commission, was also part of the package.
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Portugal\\\’s central bank predicted on Tuesday that the country\\\’s GDP would contract 9.5% in 2020, the biggest drop in economic activity since the Great Depression.
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($1 = 0.8917 euro)
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(Reporting by Victoria Waldersee and Sergio Goncalves in Lisbon; Editing by Andrei Khalip and Matthew Lewis)
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