The Covid-19 pandemic penalised Portugal's deficit by 1.9% of GDP in 2020 in national accounts, worsening the budget balance by €3.8 billion.
Exceptional measures to support the economy and respond to the pandemic penalised Portugal’s deficit by 1.9% of GDP in 2020 in national accounts, worsening the budget balance by €3.8 billion, according to a government report.
“Without the direct budgetary effect of the Covid-19 measures in national accounts, the 2020 budget balance would have amounted to -3.8% of GDP [Gross Domestic Product],” says the Technical Unit for Budgetary Support (UTAO) in the quick note on the General Government budget balance in 2020, released on Monday.
According to the experts who support Parliament’s Budget and Finance Committee (COF), in national accounts, the impact of the pandemic response measures corresponds, for the most part, to measures that worsen General Government expenditure.
“Among these – they state – the most relevant measures were furloughs (€437 million) and health expenses related to individual protection equipment and medicines (€332 million).
These measures also led to a loss of revenue, with UTAO highlighting the loss arising from the exemption from payment of the single social tax (€470 million).
In 2020, the general government balance on national accounts amounted to €11.5 billion, translating into a deficit of 5.7% of GDP, a result that, according to UTAO, “exceeded the estimate for the year as a whole presented by the ministry of finance”.