General government deficit improves by 496.8 million euros in 2016

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Page created: Wednesday, 1 February 2017 15:32 GMT | Updated: Friday, 3 February 2017 17:33 GMT

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Deficit Target  Euro Zone  General Government Balance  Portugal  Primary balance  Public Deficit  State Budget

Primary balance until December increases by 747.3 million euros compared with the same period of 2015

The general government deficit stood at 4 255.7 million euros until December, 496.8 million euros lower than for the same period of 2015. The report from the Public Finance Council regarding the budget evolution until September states that the government deficit forecast for 2016 can be achieved.

According to the budget execution until December 2016, the General Government recorded a deficit of 4 255.7 million euros, 496.8 million lower than the total for the same period of 2015. Such improvement is due to the rise of 2.7% in revenue being higher than the increase of 1.9% in expenditure, with the primary balance showing a surplus of 4 028.9 million euros, 747.3 million euros higher than the figures for the same period of 2015.

This fiscal revenue behavior derives mainly from the revenue increase of 6.7% from indirect taxes, despite the drop of 2.7% from direct taxes. The indirect tax growth is due to the revenue increase from the tax on petroleum and energy products (+22.5%), on tobacco (+24.9%), stamp duty (+4.2%) and vehicle tax (+17.2%).

The rise in government spending was influenced by the increases of 3.9% on personnel expenses and of 3.4% on State direct debt interests, and was partially compensated by the fall of 2.8% on spending with acquisitions of goods and services.

Eurostat released on a national accounts perspective the final data on the public deficit for the third quarter of 2016. Portugal recorded a deficit of 3% in the third quarter, which represents a 1 pp increase over the previous quarter, and 0.5 pp in year-on-year terms. In comparison with the other European Union countries, Portugal registered the fourth highest public deficit in the third quarter and the fourth greatest increase compared with the previous quarter.

The Public Finance Council (CFP) published the Budget Evolution Report until the end of the third quarter of 2016. The report shows a budget deficit of 2.5% of GDP, which represents an improvement of 0.9 pp. The CFP states that the data available until the third quarter indicates that the 2.4% government deficit forecast can be achieved for 2016. However, the report warns that changes in the composition of revenue and expenditure, as well as in the associated macroeconomic scenario, can jeopardize the deficit target for 2016.

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