Portugal with a surplus of 0.2%. The first time in the country’s democracy

For the first time in democracy, Portugal recorded a budget surplus of 0.2% of GDP in 2019, the National Statistics Institute (INE) announced Wednesday. This is the number in national accounts, the viewpoint that interests the European Commission and internationally.

“The balance of the General Government (GG) sector registered an increase of 0.3 percentage points in the year ending in the fourth quarter of 2019, compared to the previous quarter, standing at around 403.9 million euros, which corresponded to 0.2% of GDP (-0.4% of GDP in 2018),” writes the statistics office. Yesterday the Prime Minister had already said that there was a “high probability” that Portugal would have reached a surplus in 2019, which will no longer be the case in 2020.

A budget surplus means that the difference between government revenue and expenditure has been positive for the first time in a democracy: 403.9 million euros of surplus. As has been the case in recent years, this performance is explained “by an increase in revenue over expenditure, with variations of 0.8% and 0.2% respectively”. This is how, at least in 2019, the common word “deficit” gave rise to “surplus” to refer to the budget balance.

On the expenditure side, there was an increase in expenditure on social benefits, personnel expenditure and subsidies while the interest burden fell. On the revenue side, most taxes received more revenue in 2019, compared to 2018, but the highlight goes to social contributions, which increased by 1.7%, benefiting from the continuous improvement of the labour market.

Although this budget surplus is unprecedented in democracy – and puts public accounts at a better starting point for 2020 – there may be few reasons to celebrate it. Firstly because, as the Government has already admitted, this is no longer the priority since it is necessary to invest in health and the economy to combat the impact of the coronavirus, which will lead Portugal back to a budget deficit this year, contrary to what was planned.

The National Statistics Institute (INE) itself suggests that “the trends analysed here can be expected to change substantially” by explaining that the information in this highlight does not yet reflect the current pandemic situation worldwide. “In any case, the information made available today is useful to establish a benchmark for assessing future developments,” considers the statistics office, which will try to maintain the timetable for data production and dissemination.