Portugal recorded the eighth highest budget deficit in 2016 in the European Union, despite being the fourth country which further reduced it in year-on-year terms
The Public Finance Council has warned the Government for the need to achieve the medium-term objective of a structural surplus of 0.25% of GDP. Portugal is close to the Euro Zone average in terms of the share of public expenditure and revenue in GDP. The economic cycle had a positive impact of 0.4 pp on the GDP recorded in 2016. Public Administrations registered a deficit of 358 million euros until March 2017, 290 million euros above the deficit recorded in the same period of last year.
The INE – Statistics Portugal revised the deficit from 2016 to 2% of GDP, falling below the 2.1% originally reported to the European Commission in the first Excessive Deficit Procedure notification of 2017. According to the INE, the revision was due to an error in the collection of information at a Local Government level, whose impact improved the General Government balance by 84.9 million euros in 2016, corresponding to 0.05% of GDP, amounting to 3 722.4 million euros the deficit of 2016, the equivalent to 2% of GDP.
On 24 April, Eurostat released the data regarding the government deficit as a percentage of GDP for 2016, confirming the deficit of 2% of GDP estimated by INE – Statistics Portugal. Compared with the other European Union countries, Portugal recorded the eighth highest government deficit as a percentage of GDP in 2016, although it was the fourth country that most reduced the deficit in year-on-year terms.
Regarding the share of expenditure and public revenue in GDP, Portugal is near to the 19 Euro Area countries (EA19) average. The share of expenditure in GDP stood at 45.1% in 2016, 2.6 pp below the EA19 average. Between 2015 and 2016, the share of public spending fell by 3.2 pp, which translates into the third largest decline among the 19 countries. On the revenue side, the ratio stood at 43.1% of GDP in 2016, 3.1 pp below the EA19 average, and fell by 0.9 pp compared to 2015, the fourth highest fall in the EA19.
According to the Public Finance Accounts Report for 2016 prepared by the Public Finance Council (CFP), the economic cycle had a positive impact of 0.4 pp on the GDP recorded in 2016. Thus, the CFP estimated that the structural balance, which corrects the effects of the economic cycle and temporary measures, points to a deficit of 2.1% of GDP in 2016, which represents an improvement of 0.1 pp compared with 2015. The Council stated that “it was resumed the positive trend which started in 2010 and was halted in 2015, albeit at a slower pace than in 2010 and 2014.” Due to this result, the Council warns that in the next few years the Government should take an additional “structural consolidation effort of 0.66 pp of the GDP in order to achieve the medium term objective of a structural surplus of 0.25% of the GDP “.
According to the budget execution until March 2017, the General Government deficit on a public accounts perspective stood at 358 million euros, 290 million euros below the deficit recorded in the same period of last year. Such improvement is due to the rise of 1.9% in revenue being higher than the increase of 0.3% in expenditure, with the primary surplus increasing by 22.9%, standing at 1 502 million euros, 280 million euros higher than the figures recorded in the same period of 2016.
Monday, 24 April 2017 14:54
Brussels, April 24 (Lusa) – Portugal posted a public deficit of 2.0% of gross domestic product (GDP) in 2016, Eurostat said on Monday. This brings the country’s deficit below the 3.0% ceiling set by Brussels and would allow Po...
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