Draft budget failed: Portugal faces new elections

Although Portugal has top vaccination rates worldwide in the fight against the coronavirus, the country is heading for a new election. Because: The socialist government failed with its budget for 2022 in parliament.

Getting a budget through parliament has usually been an easy exercise for Portugal’s Prime Minister António Costa. Since he took office in 2015, he has led a minority government, so he needs the support of other parties in parliament to make laws. But he usually got them from the left bloc and the communists.

Meanwhile, the majority structure is such that for the socialist Costa the votes of one of the parties are enough. But even those are not included in the 2022 budget. A plan that Costa still stands behind, as he says in the parliamentary debate.

I have a clear conscience. Because I did everything I could to get this budget through Parliament. Without accepting things that I don’t think would be good for the country.

Dispute over the end of the austerity measures

The radical left in Portugal accuses the head of government of not having turned back the austerity measures from the debt crisis decisively enough. Costa looks too much to ensure that the state’s income and expenditure are correct. Catarina Martins, head of the left bloc, for example, is calling for a higher minimum wage and more money for civil servants in Portugal.

The support of the left bloc is over because the socialists refuse to provide better protection for workers and more investments in the health system. The socialists still feel bound by the conditions of the Troika, especially when it comes to more workers’ rights.

The government is planning to build four new hospitals – as a consequence of the overloading of the health system at the peak of the pandemic. But the socialists actually want to save too. You are aiming for a budget deficit of 3.2 percent of economic power – after 4.3 percent in the current year.

Portugal is sliding into a political crisis

According to the Prime Minister, Portugal must not gamble away its hard-earned reputation abroad, its reputation as a state that managed to get out of the debt crisis through austerity discipline. The last thing Portugal needs now is a political crisis, said Costa. But this is exactly where the country is slipping into. Because the failure of the budget could topple the government. President Rebelo de Sousa had announced before the parliamentary session:

I will hear the parties and convene the State Council. My position is simple: either we have a budget or I will dissolve Parliament.

That in turn would mean that there would be a new election. Costa is calm.

The government will now respect the decisions of the president, it does not have to comment on them. We do what follows from the President’s decision. Either to rule the country according to the rule of twelfth or to go to new elections, if that should happen.

Either way, there is a threat of limbo

The twelfth rule means: If there is no budget for a new year, the one from the previous year is used; A twelfth of the annual budget is then available for each month so that the state can deal with its most necessary expenses. A new election would be possible in January at the earliest. It should be April by the time a new budget is drawn up for 2022. This schedule would mean Portugal hanging in political limbo for months.

But at least Costa can look forward to a new election with serenity: his polls are still good, his socialists should win the election again. However, not an absolute majority in parliament. Governing with changing partners and constant uncertainties could go on.