Primary surplus until May increased by 111.9 million euros compared with the same period of 2016
The General Government deficit stood at 697.8 million euros until May, which is 359.3 million euros higher than for the same period of 2016. The Portuguese State direct debt decreased by 0.2% in May. On June 16, the financial rating agency Fitch upgraded the national debt outlook, from stable to positive, having maintained its sovereign rating on “junk”.
According to the budget execution until April 2017, the General Government deficit on a public accounts perspective stood at 697.8 million euros, which is 359.3 million euros higher than the deficit of 338.5 million euros recorded in the same period of 2016. This setback resulted from the increase of 0.2% in revenue being lower than the 1.4% increase in expenditure. The primary balance exhibited a surplus of 904.3 million euros, which is 111.9 million euros higher than the figures for the same period of 2016.
This fiscal revenue behavior derives mainly from the contraction of 13.1% in direct taxes, despite the increase by 1.3% on indirect taxes revenues. In regards to expenditure, it was mainly due to an increase in expenditure on the acquisition of goods and services, particularly in the health sector, and other expenses.
As reported by the Portuguese Treasury and Debt Management Agency (IGCP), the Portuguese State direct debt stood at 243.6 million euros at the end of May 2017, which represents a decrease of 0.2% from the previous month, but an increase of 4.6% when compared with the same period in 2016.
When regarding the debt under the Financial Assistance Program, the amount stood at 65 780 million euros (35.6% of GDP) at the end of May 2017, 407 million euros less than the previous month, of which 27 328 million euros relates to the European Financial Stability Fund, 24 300 million euros to the European Financial Stabilization Mechanism and 14 152 million euros to the International Monetary Fund.
The IGCP, on 14 June, issued 1 250 million euros in Treasury Bonds, with 750 million euros maturing in ten years with an average yield of 2.851%, lower than the previous yield of 4.227%, and 500 million euros maturing in five years with an average yield of 1.198%, lower than the previous yield of 1.828%.
The State obtained the lowest yields ever recorded on the Treasury Bills auction of 3-month and 11-month maturity, achieving a new minimum over the last auction. A trend that has been observed in the auctions carried out in recent months. The IGCP auctioned 1 250 million euros in Treasury Bills, with 1 000 million euros maturing at 11 months with a yield of -0.264%, lower than the previous minimum of -0.135% achieved in April, and 250 million euros maturing in three months with a yield of -0.337%, lower than the previous minimum of -0.266%.
This was the first auction by the Portuguese Treasury after the financial rating agency Fitch raised the national debt outlook from stable to positive on 16 June, despite having maintained the sovereign debt rating at investment grade. The agency stated that it hoped the Portuguese Government would continue to implement a tight fiscal policy, while maintaining political stability in the country with parliamentary majority support.
ECO News- Portuguese Economy
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