(Bloomberg) -- Portuguese Prime Minister Luis Montenegro said he’s available to keep talking to the Socialist Party about the 2025 budget after his minority government offered concessions to try to get parliamentary backing from the biggest opposition group.
“My conviction is that the reflection that the Socialist secretary-general told me he would do, can and should lead to the Socialist Party’s decision to let the budget pass,” Montenegro said on Thursday night in Lisbon after meeting opposition leader Pedro Nuno Santos.
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 other measures, and may have to compromise on key policies such as tax cuts to pass legislation.
The Socialist leader last week reaffirmed his opposition to 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, he proposed more investment in housing, higher pensions and increasing corporate tax incentives.404983218
The premier said on Thursday that the government is now proposing cutting the corporate tax rate by just 1 percentage point, half of what it previously planned. It also adopted the Socialist model for income tax for young people, and included other budget proposals made by the opposition party, he said.
The Socialists have just two fewer seats in parliament than the AD and can let the budget pass in parliament by abstaining. An initial vote on the budget usually takes place at the end of October.
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.
Premier Montenegro’s government 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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