LISBON (Reuters) – Portugal's new minority government will maintain a balanced budget, continue to reduce the country's public debt and carry out the long-planned privatization of flag carrier TAP, officials said on Wednesday. stated in the legislative plan.
Prime Minister Luis Montenegro's centre-right Democratic Alliance (AD) coalition narrowly won the March 10 general election, and analysts expect his government to be unstable in a divided parliament.
Under the previous Socialist Party government, Portugal had a budget deficit of 0.3% of gross domestic product (GDP) in 2022, but last year it turned into a budget surplus of 1.2%, which was higher than expected.
The Socialist Party had predicted a surplus of 0.2% this year, but the new government did not provide a concrete forecast.
The company did not immediately say whether it planned to sell TAP in its entirety or its stake in the airline. Montenegro told Reuters in December that it intended to fully privatize TAP.
The previous government approved the sale of at least 51% of TAP's shares in September, but the process stalled. The privatization has already attracted interest from Lufthansa LHAG.DE , Air France-KLM AIRF.PA and British Airways owner IAG ICAG.L .
The overall plan, which also includes tax cuts for families and businesses, higher pensions and pay increases for police, teachers and doctors, is expected to be debated in parliament later this week. If no party files a motion to deny, the motion is automatically granted.
Cabinet Affairs Minister Antonio Leighton Amaro told reporters that the government plan includes 60 proposals from other parties' election programs.
“This is a government transformation program, but it is based on dialogue,” he said. “The government is fully committed to its goal of budgetary responsibility.”
AD, which has only 80 seats out of a total of 230, has to pass the bill through either the far-right party Chega, which quadrupled its number of members to 50, or the center-left Socialist Party, which secured 78 seats. support is required. .
Montenegro has repeatedly refused to negotiate long-term support deals with anti-immigration group Chega, whose rapid rise reflects a political tilt toward right-wing populism across Europe.
Analysts expect the government's first major survival test to come in the 2025 budget towards the end of the year. In the past, Portugal has traditionally called early elections after failing to approve a budget.
(Reporting by Andrei Calip and Sergio Gonçalves; Editing by Charlie Devereux and Jean Harvey)
