Government budget deficit worsened to €2,255 million by end of March

By the end of March, Portugal’s government budget deficit on a cash basis registered a €2,255 million deficit, a period marked by the most restrictive measures to control the pandemic. This figure compares with a surplus of €81 million recorded until March 2020, before the pandemic reached Portugal. The figures were released by the Portuguese Ministry of Finance on Monday.

“This evolution translated into a deterioration of €2,358 million in comparison with the same period of the previous year, explained by the impact of lockdown and response measures to the pandemic,” writes the Ministry in a statement sent to ECO’s newsroom. This performance of public accounts was already expected given that the country faced a third wave at the beginning of the year, having been decreed a restrictive lockdown.

Until February of this year, the deficit was €1,153 million, and March alone represented a worsening to almost double that figure.

The evolution of the budget balance reflects a 6% reduction in revenue and a 6% growth in primary expenditure, which is explained by the “negative impacts on the economy particularly evident in the tax reduction and contributory revenue and extraordinary measures to support families and businesses.”

The Portuguese government expects that the deficit on national accounts, which matters in international terms, will fall from 5.7% of GDP in 2020 to 4.5% of GDP in 2021. This figure was revised slightly upwards in the Stability Program delivered on April 15, compared to the 4.3% of GDP estimated in the State Budget for 2021.