(Bloomberg) -- Portuguese Prime Minister Luis Montenegro said he’ll respond next week to the Socialist Party’s proposals about the 2025 budget as his minority government tries to get parliamentary backing from the biggest opposition group.
“The proposal handed to me by the Socialist Party is radical and inflexible,” Montenegro said at a conference in Mafra, Portugal, on Friday. “Next week we’ll give the Socialist Party a counterproposal that will be an attempt to bring the positions closer.” He said the government won’t “give up” its economic policy.
The budget, due to be presented by Oct. 10, is a key test for the prime minister’s minority administration, which took office in April after the center-right AD coalition’s narrow election win over the Socialists. Premier Montenegro needs to find backing from other parties to get approval for budgets, and may have to compromise on key policies such as tax cuts to pass legislation.
Socialist leader Pedro Nuno Santos earlier on Friday reaffirmed his party opposes the government’s plan to lower corporate tax, as well as an income tax cut for young people that he described as unfair for some. Instead, the Socialists are proposing more investment in housing, higher pensions and increasing corporate tax incentives.
“There’s room to work and talk with the government about these proposals,” Santos told reporters in Lisbon after meeting the prime minister. “If these proposals are accepted, the Socialist Party is available to let the budget pass.”
The Socialists have just two fewer seats in parliament than the AD. Prime Minister Montenegro has said governing next year using the 2024 budget “is not a solution.”
Both the prime minister and the Socialist leader have also said they don’t want early elections. Portugal has held two snap elections in three years, in January 2022 and March of this year.
Minority governments in Portugal have tended to be short-lived. In 50 years of democracy, only two have survived a full four-year term.
The government, which held talks about the budget with officials from different parties earlier in September, has said it aims to post budget surpluses of about 0.2% to 0.3% of gross domestic product in the next four years, and forecasts economic growth of about 2% in 2024 and 2025.
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