Portugal's parliament approves 2024 budget bill on first reading

FILE PHOTO: A view of Portuguese parliament during a debate on 2020 state budget at the parliament in Lisbon

By Sergio Goncalves

LISBON (Reuters) - Portugal's parliament on Tuesday approved on the first reading the majority Socialist government's 2024 budget bill, projecting a surplus for the second year in a row and further debt reduction, despite further economic slowdown.

Only the 120 Socialist lawmakers backed the bill in the 230-seat house. Except for two abstentions, the rest of the house voted against it.

The bill projects that economic growth will slow down to 1.5% in 2024 from 2.2% expected this year, as inflation and high interest rates limit private consumption, while a broader decline in European activity is seen penalising exports.

The government aims for a surplus of 0.2% of GDP next year, after a surplus of 0.8% in 2023, and wants to cut the public debt ratio to 98.9% of GDP from 103%.

Finance Minister Fernando Medina told parliament that "in times of economic growth, good policy is to have a budget surplus or a balanced budget... maintaining the possibility of reacting if economic conditions worsen without running risks to our financial credibility".

He said "Portuguese will pay less in taxes" next year and families' income will increase by 5 billion euros ($5.28 billion) in 2024, or 500 euros per resident, through lower intermediate income tax rates for the middle class, higher wages, pensions and social benefits.

The opposition argues that overall taxes would still increase, driven by indirect taxes - such as on tobacco, alcoholic beverages and circulation levy on older cars.

($1 = 0.9469 euros)

(Reporting by Sergio Goncalves; editing by Andrei Khalip)