Facing a rough 7% economic decline for 2020, today the Portuguese government will be getting the necessary national approval for an intermediate state budget which it has labelled as the Economic and Social Stabilization Plan (PEES in Portuguese), engined by EU funds.

 In practice this is mostly an act of solidarity injecting monies amongst the population, a substantial part of which own or work in the micro or small sized companies that make up nearly 99% of Portuguese businesses and pushing lay off and otherwise temporary relief measures up to the first quarter of 2021.

 Besides the additional investment in the health care system which every country is undertaking at present, there are 3 aspects in between the lines of this programme with potential long terms (re-)structural effects worth pinpointing: 

(1)   funding in e-enabling schooling and education;

(2)   creation of new development bank which is to seek to promote size and capitalization amongst the vast spread of small companies, hinting a wave of mergers and acquisitions.

(3)   acknowledgment the programme’s execution relies on a long debated and postponed decentralisation, promising a much needed hands-on and swifter execution.

We are a few days away from a renewed socialist government submitting its 2020 state budget proposals.  Delays in future approval and publication in early 2020 are not so much due to the past October elections however.

While Portuguese agencies are last minute rushing the application of the 2020 EU aid funding, the government has been trying to lobby amongst remaining EU Member States to maintain its usual share in the aid it has been accustomed to, in the next 10 year cohesion package.

So for a government which must politically avoid increasing existing tax rates, besides the recurring promises to tackle tax avoidance and corruption, the upcoming laws will imply cutting tax benefits and conditional exemptions and involve the creation of duties and levies in response to political and public pressure towards the environment.

 Political colours aside, for now, governmental stability is possibly the best news for a traditionally centrally steered and public service populated country.   

The OECD has visited Lisbon to present its 2017 outlook this week.  (Political) opinions aside, it’s worthwhile to glance at the well-presented statistics in the traditional year-on-year and OECD member comparisons to grasp a fair essence of Portugal’s (perceived) state of well being.

http://www.oecd.org/portugal/economic-survey-portugal.htm

I would want to highlight the very necessary yet significant decrease in the (albeit still too high) time taken in judicial resolve, potentially liberating much needed productivity on present and forward looking business issues, rather than past disputes.