Portugal Posts First-Quarter Budget Deficit as Spending Rises
Portugal’s Finance Ministry said the government posted a deficit in the three months through March after spending rose more than tax revenue.
Based on comparable figures, the deficit of the central administration and social security agency was 1.33 billion euros ($1.7 billion) compared to a shortfall of 434 million euros in the same period of 2012, the Finance Ministry’s budget office said in a report on its website.
Spending rose 7.1 percent. Tax revenue increased 3 percent, with revenue from indirect taxes declining 5 percent and revenue from direct taxes rising 17.7 percent.
The Portuguese government on March 15 announced wider targets for its budget deficit as it forecast the economy will shrink twice as much as previously estimated this year. The government targets a deficit equivalent to 5.5 percent of gross domestic product in 2013, 4 percent in 2014 and below the European Union’s 3 percent limit in 2015, when it aims for a 2.5 percent gap. It forecasts debt will peak at 123.7 percent of GDP in 2014.
Portugal is preparing alternative measures to meet budget deficit targets set in its 78 billion-euro aid program from the EU and International Monetary Fund after the country’s Constitutional Court on April 5 blocked a plan to suspend the equivalent of a monthly salary payment to state workers and pensioners this year. The measures blocked by the court represent 1.3 billion euros of savings in 2013, or about 0.8 percent of GDP.
Before the court ruling, the government had planned to cut spending by about 4 billion euros in the three years through 2015. About 80 percent of the 5.3 billion-euro deficit-trimming effort in the 2013 budget comes from revenue gains, most of which being 3.7 billion euros of tax increases.
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