Portuguese Government has a 980 million euros’ margin in the 2017 State Budget

Judging by the budgetary execution numbers, as well as the explanations given by the Government on how the Portuguese accounts are doing, the Executive now has a 980 million euros’ margin in terms of what was inscribed in this years’ State Budget. Taking into account the initial numbers, and if there are no slippages in the last four months of the year, the deficit in the end of 2017 could very well stand bellow the 1.5% of GDP goal.

The budgetary execution data that the Directorate-General for Budget has been disclosing justifies, for now, this confidence. The Finance minister Mário Centeno belives the goals for the 2017 deficit will be met. When he drafted the 2017 State Budget, he projected a 4,763.4 million euros’ deficit, which was compatible with the deficit goal of 1.6% of GDP; later on, that goal was revised to 1.5%. In comparison to 2016, the State Budget numbers assumed a worsening of around 581 million euros in public accounts, but the budgetary execution between January and August show an improvement of around 1,900 million euros in comparison to 2016.

However, in the past few months, the minister has also said that there are 1,500 million euros of negative impact in the accounts that will only be seen in the last months of 2017.  This impact is mainly caused by the payment of Christmas subsidy to civil servants and the fact that there will not be a positive impact from the income from PERES (fiscal amnesty programme) or European Union’s prepaid margins.

Therefore, if those 1,500 million are taken off the 1,900 million euros’ improvement, the “real” improvement is only 400 million euros, in comparison to 2016. However, one must keep in mind that Centeno hoped the public accounts deficit would increase those 581 million euros. If this element is introduced, then the current margin for the Portuguese State Budget is 980 million euros.