Portugal urged to reduce energy support measures

Portugal must reduce energy support measures as soon as possible this year and next, according to a European Commission report published on Tuesday, highlighting Portugal’s limited progress in implementing the Commission’s budgetary recommendation.

In July, the Council recommended Portugal reduce the energy support currently in place, specifying that in the event that further increases in energy prices require new or continued support measures, the government should ensure that they were aimed at protecting vulnerable households and businesses, were affordable and preserved incentives to save energy.

But Portugal is “not fully in line with the recommendation”, the Commission said in its report published on Tuesday as part of the European Semester.

“The Commission calls on Portugal to reduce energy support measures as soon as possible in 2023 and 2024,” it added.

“Most of these energy support measures [foreseen in the State Budget] in 2023 and 2024 do not appear to be targeted at the most vulnerable households or businesses and do not fully preserve the price signal to reduce energy demand and increase energy efficiency,” the report added.

Based on the economic forecasts for autumn released last week, Brussels also noted that in 2024 Portugal is expected to record a surplus of 0.1% of its GDP but should record a public debt ratio worth 100.3% of its GDP – which exceeds the 60% threshold set by EU debt rules.

Regarding “the structural elements of the budgetary recommendations” made by the Council on 14 July, the Commission said Portugal had made “limited progress” and urged authorities to speed things up.

Meanwhile, Brussels also expects Portugal to “preserve nationally financed public investment” and “continue to ensure the effective absorption of grants from the Recovery and Resilience Facility and other EU funds”.

The European Semester is the framework for coordinating the economic policies of EU countries, under which the European Commission assesses national budget plans and monitors the progress of public finances.

While the resignation of now-former prime minister António Costa has thrown the country into election mode, President Marcelo Rebelo de Sousa has promised to postpone until January the publication of the decree dissolving parliament, needed for elections to take place.

This will allow the current parliament to vote on the 2024 budget by 29 November as planned.

(Ânia Ataíde, edited by Cristina Cardoso | Lusa.pt)