October 9, 2018 / 11:27 AM / 8 days ago

Portugal expects 2.2 percent growth, budget near balance in 2019-MP

LISBON (Reuters) - Portugal’s government expects the economy to grow 2.2 percent in 2019 and the budget deficit to all but disappear, a lawmaker said on Tuesday after meeting the finance minister about next year’s budget plans.

Andre Silva of the small PAN party, who was the first to meet with minister Mario Centeno in a round of consultations in parliament, told reporters the government was aiming to slash the budget deficit to 0-0.2 percent next year after this year’s projected 0.7 percent.

“Growth is expected to be around 2.2 percent, unemployment at 6 percent, and public debt cut to 117 percent of GDP,” Silva said. That would put growth in line with this year’s estimated expansion.

“The minister did not give a precise deficit figure, but it is expected to be between zero and 0.2 percent, that big a cut,” he added.

Portugal expects to finish this year with a debt-to-GDP ratio of 121.2 percent as it continues to retreat from record highs of more than 130 percent two years ago.

The government has to present the draft budget to parliament by Oct. 15. Meeting this year’s 0.7 percent target would mean a record low deficit in over four decades of the country’s democratic history. And it would come just four years after Portugal exited an international bailout.

Although the growth forecast is a tad lower than 2.3 percent expected previously, it is well above the International Monetary Fund’s latest projection of 1.8 percent, released earlier on Tuesday as part of its global economic growth forecasts.

Last year the economy grew 2.7 percent - its strongest pace since 2000.

Prime Minister Antonio Costa said last week the 2019 draft budget would target a deficit of 0.2 percent of GDP, confirming an earlier plan released in April which was criticised by his leftist allies, who want more spending on healthcare and civil servant wages rather than focusing on deficit cuts.

Since coming to power in late 2015, Costa’s government has managed to combine fiscal discipline with measures to support growth, while reversing most of the austerity policies imposed by a centre-right administration during the 2010-14 debt crisis.

Reporting By Andrei Khalip, editing by Axel Bugge and Jon Boyle

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