Get all your news in one place.
100’s of premium titles.
One app.
Start reading
Reuters
Reuters
Politics

After backlash, Portugal to hike public pensions by an extra 3.57%

FILE PHOTO: An elderly woman walks on the day the government is expected to unveil new measures to help families and companies in Lisbon, Portugal, March 24, 2023. REUTERS/Pedro Nunes/File Photo

Portugal on Monday approved an additional 3.57% hike in public pensions from July following criticism that it was benefiting from rising tax revenues due to high inflation without sharing those gains with the country's 3.7 million pensioners.

In October the government gave a bonus, equivalent to half a monthly pension, to all recipients but suspended the formula for calculating future pensions, which depends on inflation and economic growth. If applied, it would have increased pensions by 8% on Jan. 1, 2023.

Instead, they rose by only between 3.89% and 4.83%, sparking criticism from opposition parties across the spectrum.

FILE PHOTO: Portugal's Prime Minister Antonio Costa gestures at the end of the debate on the 2022 state budget draft in first reading at the Portuguese Parliament in Lisbon, Portugal, October 27, 2021. REUTERS/Pedro Nunes/File Photo

In Portugal, over 1 million pensioners receive less than 500 euros per month. With inflation rampant, they have lost a considerable amount of purchasing power over the past year.

Prime Minister Antonio Costa said that with the new hike, "pensioners will have updated pensions at the same amount that would result from the law" that was suspended in October.

The parliamentary bench leader of the main opposition Social Democratic Party, Joaquim Miranda Sarmento, countered that "the government continues to take advantage of high inflation to fatten the state and only gives back to the Portuguese a little bit."

Earlier on Monday, the government raised its 2023 economic growth forecast to 1.8% from 1.3% predicted in November, still a sharp slowdown compared to last year's 6.7% amid stubbornly high inflation.

However, it also raised this year's inflation projection to 5.1% from 4.0%, which compares with last year's peak of 10.1% in October. The budget deficit should end this year at 0.4% of GDP, the same as in 2022.

(Reporting by Sergio Goncalves; Editing by David Latona and Grant McCool)

Sign up to read this article
Read news from 100’s of titles, curated specifically for you.
Already a member? Sign in here
Related Stories
Top stories on inkl right now
Our Picks
Fourteen days free
Download the app
One app. One membership.
100+ trusted global sources.