The Portuguese government announced this Friday new measures to help households cope with the inflationary crisis, including the application of a “zero rate” VAT on a set of basic food items. “We hope that this measure will result in a reduction” and “price stability”, indicated the Minister of Finance, Fernando Medina, specifying that ongoing negotiations with the food production and distribution sectors should take place. wrap up next week.
The socialist executive has also decided to increase social aid to the most modest families, up to 30 euros monthly and aid of 15 euros per child. This measure, which will concern more than a million families, will begin to be paid from April, said Minister of Labor Ana Mendes Godinho. These provisions also include an “extraordinary” increase of 1% in the salaries of some 740,000 civil servants, as well as an increase in their meal bonus.
Budget margins
The government will finance these measures using the budgetary margin created last year, with a public deficit which has shrunk to 0.4% of GDP whereas the initial objective was to reduce it to 1.9%, after a imbalance of 2.9% in 2021. “The accounts in order allow us to take measures in favor of families”, with an envelope of additional aid amounting to 2.5 billion euros, welcomed the Minister for Finance.
Inflation in Portugal has started to slow since hitting 10.1% last October, its highest level in 30 years. Established at 7.8% over the whole of last year, the rise in prices should be limited this year to 4% according to the government, or 5.8% according to the Bank of Portugal.