UTAO warns that TAP and Novo Banco may cost the State more money

The Technical Unit for Budget Support (UTAO) warns that there are “several risk factors” surrounding the budget projections in the Supplementary Budget presented last week by the government. The technical office points to the possibility of TAP and the Novo Banco having higher costs, in addition to reporting important omissions of information crucial to justify the goodness of the commitments requested from Parliament.

“There are several risk factors around the PAOE/2020 budget projections, with mostly downward effects on the budget balance noted by the UTAO at the level of primary expenditure,” refers to the opinion on the budget, in which the deficit is estimated to reach 6.3% this year, before falling again to below 3% in 2021.

It was already known that capital injections into TAP and the Novo Banco would weigh on the public accounts, but the UTAO anticipates it could be heavier. “Among these [risks] are those arising from other capital expenditures, which include injections and capital transfers to entities outside the general government sector, such as TAP and Novo Banco. The budgetary impact of these operations in 2020 may be higher than what is currently recognized in primary expenditure in the PAOE/2020,” it says.

In addition, UTAO sees other risks. Of the 8.8 billion proposed increase in primary expenditure, there are risks related to state guarantees in the emergency response to Covid-19 and the Economic and Social Stabilisation Programme (ESDP), which amounts to 15 billion euros.