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Angra do Heroísmo ,  June 25, 2020

Regional Government to increase investment in health, employment, economy and social area in the Region's Budget

The Vice-President of the Government announced in Angra do Heroísmo that the Regional Government will reinforce public investment in health, employment, economy and social area under the proposed review the Region's Budget and Investment Plan for 2020. 

Speaking at a press conference Sérgio Ávila defended that the proposed review, which proves to be necessary in view of the socio-economic constraints caused by the COVID-19 pandemic, will allow us to maintain the investments that were previously planned in all sectors of activity, without major changes. 

In fact, this initiative aims to enhance the response capacity of the Regional Health Service, increase the support mechanisms created to encourage the maintenance of employment and household income, and to maintain the tools designed to increase the liquidity of companies. Additionally, it provides for the reinforcement of other measures aimed at ensuring the stability of installed productive capacity as well as the gradual resumption of economic and social activity. 
“The increase in public investment and funding of the Regional Health Service is reconciled with the maintenance of the investments already planned, without any reduction in the overall amount of sector investment programmes. The additional investments in the Regional Health Service arising from the need to face the effects of COVID-19 pandemic will be made by increasing the financial resources allocated to the Region's Budget," noted the Vice-President. 

The government official added that “the remaining changes in investment actions do not entail changes to overall amount of each sectoral investment programme and result from the normal adjustment of the implementation of the Investment Plan, without changing the amount of planned investments,” except for the decisions already announced; the latter concern the cancellation of the construction of the new passenger ship and the suspension of seasonal maritime passenger transport. 

According, the proposed review of the Region's Budget and Investment Plan for 2020 provides for an increase of 210.4 million Euros in budget expenditure and a reduction of 74.6 million Euros in the Region's revenue, an increase of 160.6 million Euros in global public investment, which rises to 1,037 million Euros, and the increase of 129.8 million Euros in investment directly financed by the Region's Budget, which grows to 748.8 million Euros. 

This proposal also includes an increase of 95.1 million Euros in the financing of the Regional Health Service: 80.7 million Euros from an increase in direct transfers from the Region's Budget and 14.4 million Euros from the reinforcement of the health investment plan. 

Moreover, these adjustments provide for an increase of 72.8 million Euros in employment and business support, an increase of 50 million Euros in the co-funding of SATA's Public Air Transport Service as well as an increase of 20 million Euros in the investment for Tourism sector and an increase of 9.5 million Euros in the area of Social Solidarity. In turn, the investment planned for Agriculture will grow 6.9 Euros and there is an increase of 1.2 million Euros for Sea, Science and Technology. 

In terms of revenue, “the budget review envisages a reduction of 90 million Euros in tax revenue, specifically 57.4 million Euros less in VAT, which varies automatically according to the allocation provided for in the State Budget,” said Sérgio Ávila. As he added, "the Region receives a percentage of the VAT revenue provided for in the State Budget and the reduction of 13 million Euros in the corporate tax paid by companies results from the suspension of payments on account." 

In order to finance the increase in public investment, the Regional Health Service and the reduction of tax revenue without changing planned investments, the Region will resort to the authorisation granted by the State Budget for net financing needs amounting to 285 million Euros and for the increase of 46.5 million Euros in the revenue from the use of Community funds, especially through those that were primarily allocated to the construction of the new passenger ship, as previously announced. 

“Accordingly, the Region will use 67% of the amount of indebtedness authorised in the State Budget review, considering that this financial tool must be used with all the rigour in terms of the amount deemed necessary to face the effects of the pandemic, while ensuring the Region's financial sustainability,” revealed Sérgio Ávila. According to him, the action will be carried out “without creating constraints, limitations or restrictions to maintaining the levels of investment and support for employment, companies and household income in the coming years." 
“With this option, the Region keeps its financial capacity and autonomy intact in order to maintain the sustainability of public finances and continue next year the implementation of new measures aimed at increasing economic recovery, household income and employment, without limitations or constraints,” stressed the government official. 

In this regard, the purpose of this Budget and Investment Plan review “is to adjust the planning tools to the Region's financial effort with the aim of effectively responding to the fight against the spread of COVID-19. It will also allow us to maintain the installed productive capacity and the level of employment and household income with the financial means adjusted to these targets,” stressed Sérgio Ávila. 

With the new financial tools to be made available by the European Commission from the beginning of next year, and maintaining the sustainability of regional public finances, “the necessary conditions are created for the full use of these European financial resources and for the implementation of an agenda for economic growth, employment growth and increased household disposable income," said the government official. 

Hence, based on this strategy, the Regional Government has reviewed the macroeconomic scenario that was included in the Region's Budget, forecasting this year a lower than the expected GDP reduction for the country, which is the result of the regional measures already created and to be created as a complement to national measures. According to him, it is “a less severe economic contraction than in the country and the full recovery of the production and income levels registered before the pandemic will be achieved next year, with the GDP forecast for next year reaching the same levels as last year,” said the Vice-President.
In terms of employment in a macroeconomic scenario, according to the government official, a reduction for this year is expected to be much less pronounced than that registered in the country, with forecasts pointing to the stability and maintenance of employment levels compared to the figures registered in the first quarter of 2020. 

"It still represents a reduction in comparison with the previous year, seeing that employment will not grow as it did in the 2nd and 3rd quarters of last year; therefore, the unemployment rate estimated for next year will be lower than that recorded last year," said the government official. 

As for real GDP, the Regional Government estimates a reduction of 6.7% this year and a growth of 4.7%, next year, calculating that the GDP in 2021 will be 4,430 million Euros, already higher than the 2019 figure, standing at 4,421 million Euros. 

This year, the unemployment rate will be at 8.3%, a lower figure compared to the 9.3% recorded in the rest of the country. It is expected to drop to 6.9% next year, a percentage lower than that recorded in 2019, which stood at 7.9%. 
“At such a challenging time for the economic and social stabilisation of the Region, the Government present these documents with the aim of increasing investments and public expenditure to ensure social support, enhanced business capacity and a greater response in health provision for all Azoreans,” said the Vice-President of the Government.


Official government press-releases presented in all foreign languages interfaces of the Azorean Government Portal (Portal do Governo dos Açores) are a sub-set of the government's official press-releases daily output and are chosen for translation and publication on the foreign language interfaces based on audience segmentation criteria. The entire collection of the Azorean government press-releases is available in portuguese, here, from the GACS Press Office site.

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