Deficit improves 497 million euros in 2016

  • ECO News
  • 30 January 2017

The Directorate-General for Budget disclosed this Thursday the budget execution until December. In a press release, the Ministry of Finance has good news.

The fiscal deficit registered between January and December – meaning, in 2016 – decreased 497 million euros when compared to 2015. This is last year’s public accounts’ deficit and not in national accounts’ deficit, the most important criteria for European Institutions. That deficit will soon be determined by the entity Statistics Portugal (INE), who will report to Eurostat. The data was disclosed this Thursday by the Ministry of Finance and the Directorate-General for Budget.

This result of last year’s fiscal execution is inferior to what the government had forecasted in the 2016 State Budget. Why? Income (+2.7%) increased more than expenses (+1.9%), mainly due to a tight control in expenses – Portugal spend three billion euros less than what was expected.

Therefore, the Ministry of Finance states they are now able to say that the deficit will not be over 2.3% GDP: “This excellent result of public fiscal accounting means we are able to forecast the deficit will not be over 2.3% GDP”, can be read in the press release sent by the Ministry. Both the Portuguese prime minister and the President Marcelo Rebelo de Sousa had already made the same statement.

"In 2016, Public administrations’ deficit decreased 497 million euros when compared to 2015, stagnating at 4,256 million euros due to the 2.7% increase in income, larger than the 1.9% growth in expenses. The deficit was 1,238 million euros lower than what was forecasted in the 2016 State Budget, largely due to the restraint in actual expenses, which were 3,009 million euros below the budget. ”

Ministry of Finance

As for tax revenue, the Ministry of Finance discloses that “notwithstanding the additional 891 million euros in tax refunds, it grew 2.4% in 2016”. Why? “The tax revenue benefited from the tax recovery programme”, the press release clarifies. At issue is the fiscal amnesty programme (PERES), with which the State was able to gain 551 million euros, but also the assets revaluation programme. “Tax revenue grew 4.4%, along with the forecasts for 2016, due to the 5.2% growth in Social Security contributions and levies, which have followed the growth employment”, the press release states.

According to the Ministry of Finance, the delayed payments decreased 62 million euros when compared to 2015. The non-financial debt in public administrations has decreased 384 million euros.