State Budget for 2025 Approved in General Terms with PSA Abstention

The proposed State Budget (SB) law for 2025 was approved in general terms with votes in favor from the two parties supporting the Government, PSD and CDS-PP, and abstention by the PS.

After two days of debate, the Assembly of the Republic approved the SB proposal with favorable votes from PSD and CDS-PP, which support the Democratic Alliance Government, abstention by the PS, and votes against from Chega, the Liberal Initiative, the Left Bloc, Livre, PCP, and PAN.

The PS also announced that it will abstain in the final overall vote, scheduled for November 29, ensuring the viability of the first State Budget presented by the minority PSD/CDS-PP government led by Luís Montenegro.

The SB now moves to the next stage, with the PS committing to enabling the document's overall approval, provided there are no major changes during the specialty phase, particularly concerning the corporate income tax (IRC) reduction, which the PS opposes.

The most tense period for the Government occurs during the specialty phase, with the socialists leaving open the possibility of voting against legislative authorization for changes in Public Administration, arguing that these are unconstitutional and criticizing the Government's lack of response.

The Government has appealed to parties not to form negative coalitions that "distort" the document.

Despite the votes against at this stage, some parties have announced they will present amendment proposals.

The Minister of Finance reiterated that the margin for new measures is limited, maintaining the projected surplus of 0.3% for next year as the benchmark and signaling that new measures must have a neutral impact, meaning they must be offset.

The SB for 2025 introduces minimal changes overall compared to the 2024 budget concerning key figures. This is evidenced by the differential between the main revenues and expenditures of Public Administrations under the budgeted and unchanged policies.

The differential is only -0.1 percentage points of GDP in the case of total revenues and expenditures, while for tax revenues, personnel expenses, intermediate consumption, and investment (gross fixed capital formation), the differential is zero.

If the current SB remained in force in 2025, the weight, as a percentage of GDP, of these items would inherently remain the same compared to what is projected in the State Budget for 2025.