The President of the Republic recalls that the “historic” increase in pensions announced by António Costa for next year comes from a mechanism that is provided for in the law and that the Government could not avoid. Marcelo Rebelo de Sousa is not concerned about the effects of this “historic” growth on the stability of public accounts, above all because “won’t stay forever“: This is because inflation and growth are expected to be lower in 2023, thus mitigating increases in subsequent years.
Marcelo participated in a session commemorating the tenth anniversary of the Public Finance Council (CFP), where, in a speech, he defended the need to maintain the balance of public accounts, especially in a context of uncertainty. On the sidelines, the journalists asked Marcelo Rebelo de Sousa if the “great” and “historic” increase in retirement pensions in 2023, confirmed hours before by António Costa, could not call into question that stability.
“There is a national disease that is skepticism,” says Costa, who anticipates new support measures with no budget impact
Marcelo began by recalling that this increase comes from a mechanism provided for in the law and that the automatic updating of pensions depends on the combination of economic growth and inflation. In this year’s General State Budgets, the Government foresees growth of 4.9% and inflation of 4%. The Bank of Portugal, in projections published last week, points to growth of 6.3% and inflation of 5.9%.
The Bank of Portugal improves the growth forecast in 2022 to 6.3% but foresees a “stagnation” in the coming quarters
However, the law defines that if the average growth rate of the last two years is greater than 3%, as it should be, for pensions less than or equal to two IAS (886.4 euros this year), the increase will be the value of inflation plus 20% of GDP growth (and 12.5% more in the case of pensions between two and six IAS, €2,659.2). In higher pensions, it will be equal to the rate of inflation.
Marcelo points out that “although from now on” the economy “is not doing very well”, there will be growth “above normal” and inflation “as much as it falls” will remain high for the whole of the year. That is, this conjugationwill give an adjustment of pensions and pensions never seen before“. It is “a lot of money”, “it can be more than two billion euros”, she admits. But he underlines: such “Doesn’t mean it’s to stay foreverit depends on the evolution of the following years, starting already in 2023″.
“If we look at the foreseeable evolution for 2023, in which growth falls, in which inflation is also expected to fall, then turn around”, that is, it will no longer be”nothing comparable(for example, the Bank of Portugal points to a growth of 2.6%, while the Government speaks of 3.3%).
Source: Observadora
