Portugal: Zero budget deficit ‘is perfectly achievable’ – Joaquim Sarmento

Portugal’s Social Democratic Party (PSD) National Strategic Council spokesperson for the area of public finances said that a zero-deficit balance this year was perfectly achievable, considering the most recent data on budget execution.

“Looking at the budget execution until August, I would say that the goal is perfectly achievable,” Joaquim Miranda Sarmento said in an interview with Lusa.

Asked why the government does not assume that the deficit this year can be zero, the PSD’s national legislator said that it is due to the environment of the electoral campaign and to the fact that the Socialist Party cannot lose votes to the left.

“There are still some on the left who believe that we should have a slight deficit, although it is interesting to see that none of the parties with parliamentary seats that are running in these elections are defending any imbalance in public accounts or any budgetary expansion, or even debt restructuring,” said Joaquim Miranda Sarmento.

On 26 September it was announced that the general government surplus stood at €402 million until August, in public accounts, an improvement of €982 million compared to 2018.

The figures released by the Directorate-General for Budget for all public administrations are presented from the point of view of public accounting, taking into account the recording of incoming and outgoing cash flows, while the value of the deficit is determined by Statistics Portugal institute in national accounts, the point of view of commitments, which is what counts for Brussels.

The finance minister told Lusa on 27 September that this year’s deficit could fall slightly below 0.2%, notably as a result of VAT revenues.

The institute improved the GDP growth rate in 2017 by seven percentage points last week, from 2.8% to 3.5%, after also revising the 2018 growth rate upwards by three p.p. to 2.4%, and improved the 2018 deficit from 0.5% to 0.4% of Gross Domestic Product (GDP).

He also said that, when we look at the figures in more detail, you can see that economic growth was the result of greater investment in the construction sector.

In an interview with Lusa, Joaquim Miranda Sarmento also stressed that for many years, public finances have been merely instrumental, something that the PSD wants to change, namely through the reform of the economy ministry.

“We cannot continue to have public finances at the centre of the political debate, that does not make sense. We have to have balanced public finances and they are then an instrument to understand what public policies we should have and for what purpose,” he said.

“If our goal is, obviously, economic growth and the improvement of people’s living conditions [in terms of] jobs, wages, etc., the essential point of public policies has to be the competitiveness of the economy,” he said.