Portugal’s budget deficit last year widened to 6.4 percent of gross domestic product from 4.4 percent in 2011, according to the Lisbon-based National Statistics Institute.
Finance Minister Vitor Gaspar indicated on March 15 that the deficit, measured using rules set under the European Union’s excessive deficit procedure, widened last year on one-time items and the EU’s statistics office’s ruling that revenue from the sale of airport operator ANA-Aeroportos de Portugal SA couldn’t be factored in.
Public debt will decrease to 122.4 percent of GDP this year from 123.6 percent in 2012, the INE said in an e-mailed statement on the European Union’s excessive-deficit procedure. Debt was 108.3 percent of GDP in 2011.
Prime Minister Pedro Passos Coelho is battling rising unemployment and lower demand from European trading partners as he raises taxes to meet the terms of a 78 billion-euro ($100 billion) aid program from the euro area and the International Monetary Fund. The government on March 15 announced wider deficit targets as it forecast the economy will shrink twice as much as previously estimated this year.
The government targets a deficit of 5.5 percent in 2013, 4 percent in 2014 and 2.5 percent gap, below the EU limit, in 2015. It forecasts debt will peak at 123.7 percent of GDP in 2014.
EU officials last year had already given Portugal more time to narrow its budget gap after tax revenue missed forecasts. Gaspar on Oct. 3 announced an “enormous” increase in taxes. The government also plans to cut spending by about 4 billion euros through 2015.