File photo: Portugal's Prime Minister Antonio Costa gestures at the end of the debate on the 2022 state budget draft in first reading at the Portuguese Parliament in Lisbon, Portugal, 27 October 2021;
Credit: Reuters/Pedro Nunes/File Photo
LISBON (Reuters) - On Monday 17 April 2023, Portugal approved an additional 3.57% hike in public pensions from July following criticism that it was benefiting from rising tax revenues due to high inflation without sharing those gains with the country's 3.7 million pensioners.
In October 2022, the government gave a bonus, equivalent to half a monthly pension, to all recipients but suspended the formula for calculating future pensions, which depends on inflation and economic growth. If applied, it would have increased pensions by 8% on 1 January 2023. Instead, they rose by only between 3.89% and 4.83%, sparking criticism from opposition parties across the spectrum.
In Portugal, over one million pensioners receive less than €500 per month. With inflation rampant, they have lost a considerable amount of purchasing power over the past year.
Prime Minister Antonio Costa said that with the new hike, "pensioners will have updated pensions at the same amount that would result from the law" that was suspended in October 2022.
The parliamentary bench leader of the main opposition Social Democratic Party, Joaquim Miranda Sarmento, countered that "the government continues to take advantage of high inflation to fatten the state and only gives back to the Portuguese a little bit."
Earlier on Monday, the government raised its 2023 economic growth forecast to 1.8% from 1.3% predicted in November 2022, still a sharp slowdown compared to last year's 6.7% amid stubbornly high inflation.
However, it also raised this year's inflation projection to 5.1% from 4.0%, which compares with last year's peak of 10.1% in October. The budget deficit should end this year at 0.4% of GDP, the same as in 2022.
