The government expects the tourism-dependent economy to grow 5.4% after this year’s projected slump of 8.5%. Unemployment should slip to 8.2% after jumping to 8.7% this year. The unemployed population soared 45% to 400,000 in the third quarter.
Last year, the economy grew 2.2%, helping Portugal to reach its first budget surplus in 45 years, of 0.1% of GDP.
In last-minute amendments, the center-right main opposition Social Democrats sided with the hard left and blocked an injection of an extra 476 million euros into Novo Banco, which emerged from the collapsed Banco Espirito Santo in 2014.
The transfer, from the state-backed Resolution Fund, has been suspended pending the results of an audit.
The fund holds a 25% stake in the loss-making lender controlled by U.S. private equity firm Lone Star and has already injected almost 3 billion euros in it. The 2017 sale contract calls for a total injection of up to 3.9 billion euros, if certain losses occur. (Reporting by Sergio Goncalves and Andrei Khalip Editing by Ingrid Melander and Nick Macfie)