In the proposed State Budget for 2022 (OE2022), delivered this week to the Assembly of the Republic, the Government forecasts that the economy will grow 4.8 percent this year, an upward revision of the 4 percent foreseen in the Stability Programme which was released in April.

The Finance ministry, led by João Leão, said that "this evolution is largely due to the significant acceleration of investment compared to 2021 (+2.9 pp), as well as exports (+ 1.2 pp), which are expected to grow faster than imports".

According to the budget proposal, the public deficit is expected to fall to 4.3 percent of GDP in 2021, before falling back to 3.2 percent next year.

The improvement has been attributed to “the result of the gradual recovery of economic activity, the impetus for reforms and investments to be carried out within the scope of the PRR, measures to support the income of the middle classes, families and young people, and the reduction of costs associated with the emergency measures that it was necessary to implement at the height of the pandemic to sustain employment and income”, reads the budget proposal.

The public debt ratio will also improve in 2021, representing 126.9 percent of GDP after reaching a record 133.7 percent in 2020.

The recovery from the recession resulting from the pandemic should also continue in the sphere of the labour market, with the Government projecting a drop in the unemployment rate to 6.5 percent in 2022, the lowest value since 2003, compared to the estimated 6.8 percent for this year.

When it comes to taxes, the Government wants to create two new levels of IRS, splitting the 3rd and 6th levels, with this tax now having nine levels.

The Government explained that it will implement "an ambitious programme aimed at improving the income of families through an IRS package that incorporates several measures aimed at the middle classes, families with children and young people, and a significant increase in allowances for families".

To stimulate private investment, the government wants to launch the Tax Incentive for Recovery (IFR) in the first half of 2022, allowing companies to deduct the amount of the investment made by them up to a limit of €5 million from income tax collection.

Here are the main measures foreseen in the Government's State Budget proposal:

Employment and social support

The "vast majority of pensions" will have an increase equivalent to this year's inflation (0.9 percent), while there will also be extraordinary increase of €10, paid from August, for pensioners who receive up to around €658.

Unemployment benefits will continue to be increased next year, to guarantee at least an income of €504.63.

The national minimum wage, at €665, will increase again next year to reach €750 euros in 2023, “in line with the average increase in recent years.” This year, it increased by €30 to €665.


The health sector is to receive an increase of more than €700 million, with a total consolidated expenditure allocation of €13,578.1 million.

Personnel expenses in the health sector will increase in 2022 to €5,233.80 million, €207.9 million more compared to the estimated amount for 2021.

The increase in spending on health professionals represents an increase of 4.1 percent with “97 percent allocated to the National Health Service (SNS)”.

Construction of the new Lisbon Oriental, Seixal, Sintra and Alentejo hospitals is expected by 2023.


The amount foreseen in the State Budget for basic and secondary education and school administration is to increase by 8.5 percent compared to 2021 to a total of €7,805.7 million.

Total consolidated expenditure for science, technology and higher education increases 21.2 percent to €3,124.8 million.


The number of income brackets subject to IRS is to increase from seven to nine in 2022. The two new levels include income between €10,736 and €15,216, which is subject to a rate of 26.5 percent, and income between €15,216 and €19,696, with a rate of 28.5 percent.

The Government intends to extend the validity of the Regressar Programme until 2023, which grants tax incentives to emigrants who want to return to Portugal.

Public investment

Public investment will increase by 30 percent compared to 2021, representing, together with the Recovery and Resilience Plan (PRR), 3.2 percent of GDP.


€528 million is to be invested in railways and roads next year, with the largest share (€469 million) being dedicated to rail.

Investment in the expansion of underground networks "in the coming years" will amount to around €1.45 billion.

Support for low-emission vehicles will be maintained, including cars and motorcycles, conventional or electric, and bicycles.


The Budget Program for Culture foresees a total consolidated expenditure of €644 million, which is fixed at €390 million, for the sector, if the allocation for RTP is excluded.


IN 2022, €10 million will be allocated to local administration or animal associations to support animal welfare and sterilisation.