Portugal’s Finance Ministry said the government posted a deficit in January after spending rose and tax revenue fell.
Based on comparable figures, the deficit of the central administration and social security agency was 31.4 million euros ($41.4 million) compared with a surplus of 308.1 million euros in January 2012, the Finance Ministry’s budget office said in a report on its website.
Spending rose 9.9 percent. Tax revenue dropped 0.7 percent, with revenue from indirect taxes declining 8.1 percent and revenue from direct taxes rising 12.5 percent.
Portugal may get an additional year to narrow its budget deficit as the country’s economic outlook worsens, Finance Minister Vitor Gaspar said on Feb. 20. European Union officials last year already gave the country more time to narrow its budget gap after tax revenue missed forecasts. Tax revenue dropped 6.1 percent in 2012.
Gaspar announced an “enormous” increase in taxes on Oct. 3 and the government also plans to cut spending by about 4 billion euros in the two years through 2014. It aims for a deficit equal to 4.5 percent of gross domestic product in 2013 and will only cut the deficit below the EU’s 3 percent limit in 2014, when it targets a 2.5 percent gap.
The government aimed for a 2012 budget gap of 5 percent to comply with the terms of the aid package. The Finance Ministry on Jan. 23 posted a preliminary full-year deficit for the general government of 5 percent, beating a 5.4 percent target in the bailout program.