Portugal's Deficit Narrows to 5.6% in 9 Months to October

Portugal’s budget deficit narrowed to 5.6 percent of gross domestic product in the nine months through the third quarter, the statistics institute said.

That compares with a deficit of 6.7 percent in the same period of 2011, the Lisbon-based National Statistics Institute said today in an e-mailed statement.

Portugal, which received an international bailout last year, has already been given more time by its creditors to narrow its budget deficit after tax revenue missed forecasts and the economy heads for a third year of contraction in 2013. The government projects GDP will fall 1 percent next year after a contraction of 3 percent this year.

The government aims to reach a deficit of 5 percent in 2012 instead of the previous goal of 4.5 percent, Finance Minister Vitor Gaspar said on Sept. 11 after European Union and International Monetary Fund officials agreed on the targets. It aims for a deficit of 4.5 percent in 2013 rather than 3 percent. It will only cut the deficit below the EU’s 3 percent limit in 2014, when it targets a 2.5 percent gap.

The government last year narrowed the budget gap to 4.4 percent following the transfer of banks’ pension funds to the state.

To contact the reporter on this story: Jeffrey Donovan in Prague at jdonovan26@bloomberg.net

To contact the editor responsible for this story: Craig Stirling at cstirling1@bloomberg.net

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