By Catarina Demony and Victoria Waldersee

LISBON (Reuters) – Portugal’s parliament was expected on Thursday to extend a national lockdown imposed to combat the coronavirus for a further 15 days, while providing a chance to some businesses to reopen if the spread of the disease slows further.

Initially declared by President Marcelo Rebelo de Sousa on March 18, the state of emergency restricted movement of people, and led thousands of businesses to suspend their activities, especially in the restaurant and hotel sector.

The new presidential decree before parliament would allow for a gradual reopening of some services and companies, but does not specify which ones or when, and says this will hinge on data continuing to show a slowdown in the spread of the coronavirus.

“The Portuguese have been the big heroes during the state of emergency period,” Interior Minister Eduardo Cabrita told parliament before the vote, due later on Thursday, on what would be the third extension of the lockdown.

The number of confirmed coronavirus cases in Portugal has risen to 18,841 with 629 deaths, far fewer than in neighbouring Spain, where more than 19,000 have died.

Prime Minister Antonio Costa said on Wednesday it was not yet time to “gradually and progressively” reopen the economy.

The municipality of Portimao in southern Portugal and the Madeira Islands said they would distribute 250,000 masks to their populations from next week, after health authorities reported on Monday they were considering making the use of masks obligatory in closed public spaces.

Health Secretary Antonio Sales said on Wednesday Portugal’s coronavirus curve had flattened due to the “excellent behaviour and civic-mindedness of the Portuguese people” who obeyed the lockdown rules imposed by the government.

The coronavirus outbreak has already hit various sectors of Portugal’s tourism-dependent, export-oriented economy.

Around 80% of Portuguese companies either still operating or temporarily shuttered by the coronavirus outbreak have reported a sharp drop in revenues, at times exceeding 75%.

The International Monetary Fund said on Tuesday it expected Portugal’s economy to contract by 8% this year, way above the central bank’s prediction last month of a drop between 3.7% and 5.7%.

Ratings agency Moody’s downgraded its outlook for Portugal’s banking system to ‘negative’ from ‘stable’ on Thursday, expecting banks’ asset quality and profitability to deteriorate over the next 12-18 months due to the coronavirus pandemic.

(Reporting by Catarina Demony and Victoria Waldersee, Editing by Gareth Jones)

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