Portugal Budget 2012
Highlights of Portugal Budget 2012:
- The 2012 budget will address critical areas such as reduction of budgetary deficit.
- There will be several pay cuts in the 2012 budget for achieving the strict fiscal goals.
- Portugal is expected to bring down its budgetary deficit for 2012 fiscal to 4.5 percent of its GDP for that year.
It is expected that in 2011 fiscal the budgetary shortfall will amount to 5.9% of the GDP.
- Taxes will be increased in 2012 and civil servants will not be eligible for year-end bonuses and holidays.
As per other information, the year-end bonuses can also be subjected to a 50 percent tax.
- The Portuguese economy will be reduced by 3 percent in 2012 compared to 1.6 percent in 2011.
This means that Portugal will see its biggest recession after 1974.
- In 2012 capital taxes will be increasing – the value added taxes will go up to 23 percent from 13 percent on various products – majority of them in the catering industry.
Expectations from Portugal Budget 2012
The Socialists, who are the main opposition in Portugal, have so far not voted against any budget related decision taken by the central government but they estimate that the 2012 budget could lead to the biggest recession in this European country in decades. This shows that the parties are united when it comes to the budgetary measures and restoring overall economic stability through external financial aid.
It is expected that the 2012 budget will help Portugal receive bailout of 78 billion euros from the International Monetary Fund and the European Union if they are able to create a tight budget.
Portugal has been trying to create some difference between its economic and political condition and that of Greece. So the unified stance of all the political parties regarding the austerity measures mentioned in the 2012 budget is being regarded with importance by the economic experts.
According to analysts, Portugal’s economic growth will be hampered in 2012 by the present economic condition in Europe and increasing public debt. Vitor Gaspar, the Finance Minister, has justified the budget saying the restrictive measures were necessary in order to win back the trust of Portugal’s international partners and the global financial markets.
The Portuguese President Anibal Cavaco Silva has stated that the government will be able to limit the budgetary deficit for 2011 fiscal to 5.9% of the GDP, which was previously the target. Silva hopes to achieve the goal by striking a deal with the banks whereby they will move certain amounts from their respective pension accounts to the national treasury.
The government has stated that majority of its budgetary shortfalls resulted from the economic policies and operations of the preceding administration and these deficits have prompted them to go for the restrictions and increased taxes.
The present administration estimates that the budget will establish a base from where the national economy will be able to sustain its growth and reduce its debts. It is also expected that the economy will start recovering from the later half of 2012 fiscal.
The government also estimates that the economy will start growing only from 2013 onwards as the exports are expected to go up around that time.