Portugal Posts Wider Deficit as Spending Rises, Revenue FallsJoao Lima
Portugal’s Finance Ministry said the government posted a wider deficit in the six months through June after spending rose and revenue fell.
The deficit of the central administration and social security agency was 4.02 billion euros ($5.3 billion) compared with a deficit of 1.7 billion euros in the same period of 2012, the Finance Ministry’s budget office said in a report on its website.
Spending rose 3.8 percent as subsidy payments increased, and revenue fell 3.1 percent. Tax revenue climbed 6.5 percent, with revenue from indirect taxes falling 4.3 percent and revenue from direct taxes rising 25 percent.
Prime Minister Pedro Passos Coelho on May 3 announced measures intended to generate savings of about 4.8 billion euros through 2015 that include reducing the number of state workers as he tries to meet the terms of a 78 billion-euro aid program from the European Union and International Monetary Fund. Government ministries will have to reduce spending on purchases of goods and services by at least 10 percent next year, Coelho said on May 3.
The government on March 15 announced less ambitious targets for narrowing 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 EU’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.