Eurostat confirms that including CGD's recapitalization, the Portuguese deficit stood at 3%, only behind Spain. Even without CGD, Portugal is in 19th place in the fiscal balance rating.
The impact of the recapitalization of Caixa Geral de Depósitos (CGD) was accounted for in last year’s deficit, raising it to 3%, Eurostat stated, confirming the numbers that were previously disclosed by INE. This is the second worst result in all European Union countries, right behind Spain. Even excluding the capital injection in the State bank, there is not much of an improvement: Portugal is still on 19th place in the ranking of the best fiscal balances.
If CGD’s impact is excluded from the 2017 deficit, it stood at 0.9%, which means Portugal improves its position in the rating, but not by much. Some countries have lower deficits, like Estonia, Ireland, Latvia, Finland and Austria, but there are also some countries registering a surplus — Malta’s is 3.9%. This performance lead the Portuguese Executive to revise its goal for 2018 from 1.1% to 0.7%, in order to pursue an adjustment effort.
With CGD, Portugal has the second worst deficit
When INE officially disclosed the amount of the deficit, INE specified that “considering two decimal places, the net borrowing of GG corresponded to 2.96% of GDP and the effect of the CGD recapitalization process was 2.04% of GDP in 2017” and, as a consequence, “excluding this impact, the net borrowing was 0.92% of GDP”.
The Finance minister Mário Centeno believes “it is wrong” to include CGD’s impact on the 2017 deficit, as imposed by Eurostat. “It is contrary to the decision made by the European Commission, and it contradicts the European treaties and does not properly represent the investment made on CGD by its shareholder”, the minister stated. Centeno believes CGD is an investment and not a State aid, so it should not be included in public accounts.