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Portugal Reaffirms Goal of Cutting Debt to Less Than 100% of GDP

Joao Lima
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Portugal Reaffirms Goal of Cutting Debt to Less Than 100% of GDP

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Portuguese Prime Minister Antonio Costa reaffirmed a goal of reducing government debt to less than 100% of gross domestic product in the next four years as he was sworn in for a second term.

Costa clinched victory in the Oct. 6 general election, showcasing Portugal’s political stability and increasing the number of seats his Socialist Party controls in parliament. The premier has said he wants to continue increasing families’ disposable incomes while sticking to fiscal discipline and reducing the country’s debt burden, the third-highest in the euro area behind Greece and Italy.

The government aims to raise the monthly minimum wage to 750 euros ($831) in 2023 from 600 euros at present, Costa said in Lisbon on Saturday, after his government was sworn in. The prime minister also said that new measures to address climate change include a plan to close the Pego and Sines coal-fired plants in 2021 and 2023 respectively.

Costa, who’s keeping Mario Centeno as finance minister in his minority government, has said that he’d like to present the 2020 budget to parliament this year. The government forecast in a draft budget plan on Oct. 16 that the economy will grow 2% in 2020, faster than a 1.9% pace estimated for this year. Debt is projected to decline to 116% of GDP in 2020 from an estimated 119% in 2019.

The Socialist Party said on Oct. 10 that the new minority government will continue following the same approach used in its first term and hold discussions in advance with other parties about budget proposals. Approval of most laws, including the budget, requires a simple majority in parliament. In his first term, Costa got consistent support for his budgets from the Left Bloc, Communists and Greens, leading only the second minority government in Portugal to serve a full term since a four-decade dictatorship gave way to democracy in 1974.

(Adds plan to close coal-fired plants in third paragraph.)

To contact the reporter on this story: Joao Lima in Lisbon at jlima1@bloomberg.net

To contact the editors responsible for this story: Chad Thomas at cthomas16@bloomberg.net, Jon Menon, Nikos Chrysoloras

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