The Ministry of Finance believes that “every euro invested in the PRR will have an impact of 1.4 euros on GDP”. In 20 years, the impact has been five times greater. The government is more optimistic than the Bank of Portugal.
By 2025, due to government planned investment, the Recovery and Resilience Program (PRR) is expected to have a 3.5% impact on gross domestic product (GDP).
The Ministry of Finance advanced this estimate in the “Stability Plan” adopted at the General Assembly of the Republic on Thursday.
“By quantifying the impact of PRR investment in the short term, the average annual growth rate of GDP can be increased by 0.7%,” first pointed out the document prepared by the João Leão team. The Stability Program (PE) added that GDP in 2025 will be 3.5% higher than the scenario without PRR.
Financial calculations point out that “in these five years, every euro invested in PRR will have an impact of 1.4 euros on GDP (short-term multiplier).”
At stake are the 16.6 billion euros in grants and loans from the European Union that will inject the economy into the post-pandemic recovery. Of this cake, $13.9 billion is free (lost funds), and $2.7 billion in low-interest loans.
The government’s estimate is much more optimistic than that of Banco de Portugal. The Bank of Portugal pointed out in an economic announcement issued in March that by 2026, the impact of GDP will be between 1.1% and 2%.
In the eyes of the European Parliament, financial work has exceeded these five years. “Assessing the impact of PRR investment and reforms, it is concluded that a multiplier of approximately 4.8 has been accumulated in 20 years. In other words, during the period 2021-2026, every euro invested under the PRR will be converted into cumulative income. About five times the PRR. “The next 20 years”, pointed out the document.
Within the scope of the so-called “European semester”, the government must submit the latest information on the “stability plan” to the Parliament of the Republic before April 15 for deliberation within 10 days before submitting it to the European Commission. It must be held before the end of this month.