There was still a budgetary surplus in October, showing a significant y-o-y increase. However, that surplus has dropped when compared to September.
There was a budgetary surplus of €259m in October, the Finance Ministry revealed in a note. This result is showing there is an improvement in comparison to last year’s balance, but it has worsened in comparison to the previous month of September’s accumulated balance.
“The level of budgetary execution in the Public Administration registered a global surplus amount of €259m up until October, which represents a year on year increase of approximately €2.1bn“, the Ministry stated in the note released this Thursday.
In September, the budgetary execution level stood at a positive and sound value of €1.34bn, with the government at the time noting that this should be severely impacted by the end of the year, as the Christmas subsidies for public workers and state pensioners approached, estimated to reach around €3bn.
October’s outlook still benefits from not being hit with this extra expenditure coming from the Christmas subsidies. “The expenditure has benefited with the end of the monthly twelfths, that are now paid fully in November and December, costing in total €2,980 million (~€3bn)”, the ministry continued.
The performance until October is explained by “a 5.4% increase in revenue, which stood above the 2.1% increase rate of expenditure”, the Finances ministry explained.
In terms of revenue, the Ministry led by Mario Centeno highlighted that ” the tax revenue in the State subsector increased by 5%, with a net increase of VAT at 4.8%, Corporate Tax at 11.1%, and of personal income tax at 4.4%. The tax return increased by 2.1%. The tax revenue has benefited from a good economic climate in our country and the contributive revenue benefited from the behaviour of the labour market, which was evident with the 7% increase in contributions to Social Security”.
The government also notes that on the expenditure side, it has invested in those which were considered the most urgent areas: “Expenditure in Public Administration increased by 2.1%, partially explained by the strong 4.6% increase in expenditure in the National Health System, social cohesion subsidies and welfare, with particular interest on inclusion. There was also a significant increase in expenses with public transportation companies, such as Comboios de Portugal (+15.3%) and Infrastruturas de Portugal (+6.8%), Culture (+8.4%) and the armed forces such as the Criminal Police (PJ, +40.9%) and the Portuguese Gendarmerie (GNR, +30.3%).
The government is expecting a budgetary deficit of 0.7% of GDP for this year, and 0.2% in 2019.