As the European Union oscillates between emerging from coronavirus-imposed lockdown to reinstating quarantine measures as some Member States see a spike in cases, Portugal is doing all it can to safely salvage the tourist season. Accounting for over 15 percent of the country’s GDP, the travel industry played a crucial role in enabling the country’s recovery following the 2011- 2014 financial crisis and consequent bailout.
Flights resumed last month on June 15, with Prime Minister António Costa confirming that airports in Lisbon are ready to prevent the spread of COVID-19. “I believe I can say what the Directorate-General for Health has already said, but also what international civil aviation institutions have already said, that is, that Portugal’s airports are ready, to comply with safety standards and are prepared to welcome the resumption of air traffic with all normality,” affirmed Costa.
But a recent surge in confirmed cases of COVID-19 forced 19 neighbourhoods in the Lisbon region, apart from the capital’s centre, into a two-week lockdown, which is in place until July 14. A total of 328 new cases were reported this past Sunday, along with nine virus-induced fatalities. The increase has led officials to instate new travel measures that require any traveller originating outside of a non-EU country, including Brazil and the United States, to provide proof of a negative test prior to boarding a plane to Portugal. Airlines that allow passengers on their planes without appropriate documentation could face hefty fines, and travellers who face testing at Portuguese airports on arrival must be prepared to pay for it themselves.
In response, last week the UK excluded Portugal from its safe travel list, meaning anyone holidaying in the country will be forced to undergo a 14-day quarantine upon their return to Britain. With British travellers accounting for 2.1 million of Portugal’s foreign visitors in 2019, the move is seen as a blow to Portugal’s recovery efforts. However, the UK has committed to review the decision by July 27.
Similar to Greece, Portugal is a Southern European nation which has managed to keep the coronavirus death rate fairly low, totalling 1,631 fatalities, as of July 9, among a population of fewer than 11 million. The government hopes to use these metrics – as well as the new travel measures – to continue to sway tourists into feeling that Portugal is a safe place to visit. Part of this assurance includes measures such as new hygiene certifications at tourist facilities, designating them as safe places to stay. More than 14,000 businesses have received the certificate, with over 15,000 employees having received specialised training.
“We are among the countries that tested the most, we’re one of the countries that better knows the real spread of the virus, where the numbers are the safest and where people can come with confidence,” Costa said. “Confidence will be one of the differentiating factors at the moment of choosing where to go on holidays – I think that Portugal is a good destination.”
Keeping the Economy Going
Portugal’s economy was hard-hit by the COVID-19 crisis. The pandemic induced lockdown resulted in an 8.7 billion euro gap in public revenue, and the government expects a 6.3 percent deficit in 2020 with an increase in public debt to 134.4 percent of GDP in 2020 – up from last year’s 117.7 percent. Portugal’s central bank has predicted that the country’s GDP will contract by a total of 9.5 percent in 2020, leading to the biggest drop in economic activity since the Great Depression.
During the commemoration for Portugal Day on June 10, normally robust commemorations were stripped to the bare minimum. President Marcelo Rebelo de Sousa told the nation that they cannot pretend that they are not facing a “brutal economic and financial crisis…[with] almost 1,500 deaths, tens of thousands of people infected, more than 300,000 unemployed, 800,000 workers in layoff and thousands and thousands of businesses stopped; sectors totally paralysed”. The next months and years should be viewed as a “unique opportunity to change what needs to be changed with courage and determination,” de Sousa added.
In order to prop up the battered economy, on July 3 Portugal’s parliament approved a supplementary budget that increases spending by 4.3 billion euros. This includes 1.6 billion euros for a new furlough scheme, maintaining jobs and employment training, as well as tax discounts and delays for companies that were pursuing investments or were otherwise particularly hard-hit by the ongoing crisis. Another 500 million euros has been allocated to the national health service. Debt ceilings for local governments and public companies are set to be lowered, and a 1.2 billion euro rescue loan for Portugal’s flagship carrier TAP Air – already approved by the European Commission – is included in the supplementary budget.
The measure passed with 108 votes out of the 230-seat parliament, with many choosing to abstain.
“We have truly faced exceptional times. This budget intends to respond to the impact of a health crisis which caused an unprecedented economic and social crisis,” said Finance Minister Joao Leao.
The Portuguese are wary of enduring another round of austerity, with fiscal adjustments post sovereign-debt crisis and an international bailout in 2011 leaving bitter memories. But Leao has assured citizens that this new supplementary budget will not be financed by an increase in taxes, and thus won’t herald the return of austerity.
Meanwhile, Portugal has seen a major increase in applications for their Golden Visa programme, up three-fold what it was this time last year. The total investment resulting from the granting of Residence Authorisation for Investment (ARI) reached 146,168,473.40 euros this May, which represents an increase of 192 percent compared to the 50 million euros recorded at the same time last year. Between January and May, 529 golden visas were issued. More than half of these, for a total of 270 golden visas, were granted last month.
The programme has become an increasingly popular venture as it offers individuals a quick way to attain EU residency and citizenship via investment. Two of the qualifying investment options involve purchasing property, which is an asset that can gather income down the line via rentals and other options, and with the amount spread across multiple properties.
The country also has a low residency requirement totalling only 35 days over a five-year qualifying period, which amounts to about one week per year. For Portugal, issuing Golden Visas is proving to be a fairly painless way of generating income during a period of intense economic contraction as COVID-19 continues to wreak havoc on peace and prosperity for nations on a global scale.