Portugal government promises lower budget gap, steady 2019 growth

LISBON (Reuters) - Portugal's Socialist government promised on Tuesday in its 2019 election-year budget to deliver the lowest deficit in democratic history while giving civil servants higher pay and helping families with transport costs.

In the draft budget the government said it would cut the budget deficit to 0.2 percent of gross domestic product from this year's projected 0.7 percent, and reach economic growth of 2.2 percent, just a touch lower than this year.

The draft forecast unemployment of 6.3 percent next year, down from 6.9 percent in 2018.

"This is a good budget to follow the route we have been on so far, of more growth, more jobs and more equality," Prime Minister Antonio Costa said in a tweet.

Portugal's economy has rebounded strongly from a 2011-14 debt crisis under the ruling Socialists in the past three years, helped by strong exports, rising foreign investment, booming tourism and housing.

While keeping the deficit on a downward path, the budget proposes to subsidise families' transport costs in the Lisbon and Porto metropolitan regions, where nearly half of Portugal's population lives. The subsidy will cap two family members' monthly public transport passes at 40 euros and make all subsequent ones free.

The blueprint also unfreezes civil servants' career progression for the first time since 2009, delivering salary increases and promotions to many. Public pensions will also rise by more than inflation in 2019.

Portugal's debt-to-GDP ratio should fall to 118.5 percent next year from 121.2 percent in 2018, the document showed.

Finance Minister Mario Centeno presented the draft budget to parliament just before midnight. He will hold a news conference early Tuesday to provide more details on the blueprint.

(Reporting by Axel Bugge and Sergio Goncalves; Editing by Leslie Adler)