Tensions in Parliament and Uncertainty over OE2025 in Government’s First 100 Days

In its first hundred days, the government has already seen Parliament change its proposal to cut the IRS and the PS approve several diplomas against the PSD and CDS-PP, while doubts remain about the viability of the 2025 budget.

The SDP/CDU-PP executive, led by Luis Montenegro, completes its 100-day term on Wednesday, and the 80 MPs who support it, just two more than the PS board, have already predicted a difficult parliamentary situation that the Assembly of the Republic, which is the third political force – Çega with 50 MPs, will face.

In his inaugural speech at the Palacio da Ajuda on April 2, Prime Minister Luis Montenegro left his interpretation of the stability of the executive power: “Not rejecting the government program means allowing the government to begin to act. But it means more: it means allowing its implementation until the end of the mandate or, in extreme cases, until the approval of a vote of no confidence.”

Although this view was challenged by the opposition, the PS continued to abstain, as it had promised on the night of the election defeat, from the BE and PCP motions to reject the government programme (Chega voted against), and the executive power assumed full functions on 12 April.

In late March, the leaders of the PSD and PS had already had to come to a last-minute agreement to elect the Social Democrat José Pedro Aguiar-Branco as President of the Assembly of the Republic after three failed attempts – and despite Chegi President André Ventura declaring that he would make the PSD candidates viable – which involved a 50-50 split of the roles, with the Socialists having to name the eventual other half of the legislature.

Since then, although both Montenegro and Pedro Nuno Santos have publicly insisted on their willingness to engage in dialogue, only in the justice sector have there been recent signs that the government and the PS may attempt to reach an understanding on revising some aspects of the Criminal Code and criminal procedure.

The most telling example of complex parliamentary arithmetic was the government’s proposal to reduce the IRS: AD, PS and Cega did not agree on the levels at which the reduction should be applied, and the Socialists’ version was eventually approved, thanks to votes for the Left and the abstentions of I.L. and Cega.

In the final global vote, against the will of the parties supporting the government, the PS proposals to increase the electricity consumption by 6%, to abolish the toll on the former SCUT or to extend the housing deduction under the IRS were also approved.

The PSD and the government accused the PS and Chega of “colluding” and creating an “objective alliance” against the government, a thesis that the leader of the Socialists, Pedro Nuno Santos, considers absurd, pointing to other diplomas that André Ventura’s party has voted for on the executive side, such as the end of the emergency contribution to local accommodation.

With the exception of the IRS proposal, which could come into force this year, the rest of the diplomas that the PS managed to approve in defiance of the PSD/CDS-PP will only be for 2025, that is, if the state budget is approved for next year.

For this to happen, either the PS will have to abstain – Pedro Nuno Santos has warned that this will only be possible if the government does not ignore the Socialists – or Chege will have to vote in favour.

The President of the Republic defended the importance of political stability and the approval of the next budget, including through the implementation of the Recovery and Resilience Plan, but without saying that in this case there would be early elections (as he did in 2021), this will not happen.

“We all understand that if the budget is not voted on at the end of the year, it means that there are two paths: either there is an electoral political crisis or a non-electoral political crisis in which the government will govern through the Twelfth Parts in an insecurely weakened way, and this will immediately affect the management of European funds,” Marcelo Rebelo de Sousa said on May 29 in São João da Madeira.

The prime minister reiterated that he was open to dialogue but could not force the opposition to unite politically, and insisted that the end of the legislature’s work was predetermined by the constitution in 2028 and that it would not be cut at the government’s behest.

Montenegro, which the head of state has already classified as a “policy of silence”, has skillfully managed his public appearances and, above all, the number of times he answered questions from the media, as he has not yet given a major interview since his election as prime minister.

The European elections, which the PS won narrowly on 9 June, brought new promises of dialogue from both sides, but so far without practical results, and the big news of the evening was the announcement of support from the PSD/government CDS-PP for former Prime Minister António Costa as President of the European Council, a position to which he had meanwhile been elected.