The “asterisk debate”: PS criticizes gaps between electoral program and Brussels, Government promises greater growth with an “if”
The Medium-Term Structural Budget Plan, sent to Brussels, cannot be compared to the electoral program of the Democratic Alliance (AD), argues the Government, as they are documents with different methodologies for the last years of the legislature. This is not the understanding of the Socialist Party (PS), which took advantage of this Friday’s urgent debate, called by itself, to highlight divergences in a large number of estimates, from employment to wages, from exports to investment, in addition to economic growth. . But, after all, what distinguishes both?
Let’s go in parts. This document sent to the European Commission, with different characteristics from the previous one (which had been suspended due to the pandemic), requires Member States to outline economic projections for the next four years. For 2025, these forecasts are those contained in the Union Budget, but from then on, the document is based on the so-called invariant policy scenario, that is, it removes from the equation possible impacts of current measures or those that the Government plans to implement, as well as costs related to interest or European programs.
And, therefore, the Government says that there are major differences in relation to the program with which it presented itself for the elections in March this year. For example, at that time, the AD predicted an average growth of 2.90% between 2025 and 2028, but “sold Brussels” an average growth of just 1.95% over the same period. The argument used by the executive is the following: if the opposition approves all the measures foreseen in the electoral program (some have already undergone changes), the economy will grow much more than what is written in the medium-term plan. But it also does not guarantee that it will grow to the level promised in the election campaign.
“If you let us implement and execute our electoral program, you will see the economy grow”assured the Minister of Finance, Joaquim Miranda Sarmento.
For this reason, Rui Tavares called this morning’s debate the “asterisk debate”. Putting himself in the position of the executive, the leader of Livre explained: “We would do all that *asterisk*, if we have growth of 4% per year; there will be economic growth of 4% *asterisk*, if they let us do everything we do we want…”, adding that “We cannot hide behind this jungle of terminology and methodology to escape a fundamental question: what did we say to citizens before the elections and what do we say afterward.”
But, even with the methodological differences, there are many points in which the rules of the electoral program and the plan sent to the European Commission converge, especially when it comes to projections for next year, which the PS explored.
Will the average salary increase be 4.7% or 3.9%?
The debate began with an intervention by socialist António Mendonça Mendes who accused the Government of agreeing with the social partners on an increase in the average salary of 4.7% for next year, as stated in the income agreement, but selling to Brussels an increase of just 3.9% in the Portuguese salary for 2025.
“Who is the Government fooling?”, asks Mendonça Mendes in his initial intervention and continued: “It is the Government’s return to dissimulation, committing itself in Brussels to different results from those it commits to in Portugal. What else is hidden by the Government in Portugal, what it promises to Brussels?”
The executive’s response came from congressman Paulo Núncio, who never directly responded to the issue of salaries, but once again defended the methodological differences between both documents and guaranteed: “If the government’s plan is implemented, we will be able to achieve growth targets far above what we have seen in the last 8 years”but PS needs to make the reforms that are planned possible, he added.
Also for next year, the electoral program that the AD took to the elections promised growth of 2.5% and now optimism has faded, leaving the then executive to work with an expansion of 2.1%. Again, for 2025, this projection is the same as the State Budget and, therefore, already implies the new measures presented or put into practice. From 2026 onwards, the projection removes these accounts from the equation and, according to the glossary of the Public Finance Council (CFP) “cannot be interpreted as if it were a forecast”.
Ireland is the fastest growing advanced economy in these three decades. Take a jump that is six times the Portuguese
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“A few months ago getting the economy to grow was a matter of will, now they can’t even beat the previous year. Basically, what we have is a different perspective on the same mistakes of the past and present”, said Mariana Mortágua, from Bloco de Esquerda. Carlos Guimarães Pinto, from the Liberal Initiative, is of the opinion that “Making predictions in invariant policies not only responds to European policies, but is the most realistic thing that can be done” and pressured the Government to further reduce IRC: “The last time the PSD promised a fiscal shock for companies was 22 years ago” and it chose not to move forward.
In his response, Joaquim Miranda Sarmento spoke again about European rules and accused the PS of not knowing them, despite them having been defined during his mandate.
Poorer employment, investment falls
In employment, the AD’s electoral program predicted growth of 1.1% in 2025 and an average expansion of 1.4% per year, until 2028. But in Brussels’ plan, This segment will grow by less than half next year (0.7%) and the average for the period will be 0.5%. “Portugal will have 50,000 fewer jobs per year than promised”, argued socialist deputy Sérgio Ávila.
In exports of goods and services, the AD projected a growth of 3.8% in March for next year, reducing it to 3.5% in October, and the average expansion of this component should also be lower (4.15% in the elections vs 3.25% now). In public investmentthe electoral program pointed to 5.2% in 2025 and an average of 4.07% (compared to 3.5% for 2025 in the Brussels plan and an average of 2.92% over the four years). In internal search, in March, it projected an increase of 2.5% (vs 2.1%) for next year and an average of 2.73% (vs 1.9% now) until 2028.
Public debt reduction shrinks
Regarding public debt, the AD’s electoral program pointed to 92.2% of GDP in 2025 and a reduction of 15.8 percentage points by 2028 to 80.2%. But the plan sent to Brussels implies a reduction at a slower rate (10.1 percentage points) to 83.2%, starting in 2025 with 93.3%.
The International Monetary Fund (IMF) is more optimistic, predicting that the level of Portuguese debt will fall from 99.1% in 2023 to 94.4% in 2024 and 76.2% in 2029. In average annual debt cuts, the IMF calculates 3.8 percentage points of GDP and the Government indicates 3.2 points. In both cases, an annual reduction of less than 4 percentage points of GDP between 2016 and 2023 under António Costa’s governments.
ANTONIO COTRIM
O IMF was also more optimistic than the government ingrowth forecasts for the Portuguese economy in the short term and medium term. Between 2024 and 2029, the Fund’s economists point to an average annual growth of close to 2%, while Miranda Sarmento projects a more modest average of 1.7%.
When it comes to the budget balance, while Sarmento’s team points to surpluses of 0.4% of GDP in 2024, 0.3% in 2025 and 0.1% in 2026, the IMF’s projections do not go beyond an annual average of 0.2% in the three years.
The discrepancy between government and IMF projections extends to 2027 to 2029. In the Plan sent to Brussels, Sarmento points to positive balances of 1.1% in 2027, 1.3% in 2028 and 0.9% in 2029 , while the IMF insists on an average of 0.2%.
The exchange of arguments gained weight this week, on the eve of this debate, when Miranda Sarmento once again explained the methodology of the program sent to the European Commission, in an article on Public entitled “Three myths due to lack of knowledge of budgetary rules”. Two days later, in the same newspaperAntónio Mendonça Mendes, from PS, responded with another text with the title “The three errors of the three myths”.
Previously, Miranda Sarmento had already been at SIC, justifying the difference between the documents, on the Business of the Week program and guaranteed that the “economy will grow much higher than the numbers we present”.
