Portuguese Prime Minister Announces EUR2.2bn Stimulus Package

by Ulrika Lomas, for LawAndTax-News.com, Brussels

17 December 2008

Portugal has unveiled a EUR2.2bn economic stimulus package, including a focus on increasing the level of exports.

The package announced by Portuguese Prime Minister Jose Socrates targets mainly employment and aid for struggling small- and medium-sized enterprises. Exporters will also benefit under the plans. The package was made possible by EU funding, which will cover half of the total cost.

Socrates has allocated funds amounting to EUR800m to aid export-reliant companies by creating ‘credit lines’ and freeing up liquidity for ailing SMEs. The government has set a budget of EUR500m for schools, EUR250m for energy installations and EUR580m for employment programs.

The Prime Minister emphasized that the government would also focus on creating employment opportunities particularly for those who are long-term unemployed including the creation of more than 12,000 internships. The government has also announced that it will reduce ‘social contributions’ for employees over the age of 45.

The Portuguese government posted a 2.2% of GDP budget deficit this year, and anticipates a 3% of GDP deficit in 2009, at the top end of the limits stipulated by the Maastricht Criteria, which underpins the stability of the eurozone.

Socrates told reporters:

“The margin of manoeuvre that we have, of 0.8% (up to the 3% limit), we will use to stimulate the economy, to modernize the country and protect companies and families.”

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