Pandemic cost Portuguese state €6.25 billion in first 10 months of year

The Covid-19 pandemic cost the Portuguese state €6,247.9 million in the first 10 months of this year, due to its spending €5,275.8 million more and receiving €972.1 million less revenue, figures released by the Directorate General of the Budget (DGO) show.

“By the end of October, the implementation of measures adopted in the fight against and prevention of covid-19, as well as those aimed at restoring normality, led to a reduction in revenue of €972.1 million and an increase in total expenditure of €5,275.8 million,” reads the Summary of Budgetary Implementation released late on Thursday.

According to the DGO, in terms of revenue, “the estimated impact associated to the suspension of payments on account of corporate income tax (€695.4 million) stands out”, as well as the exemption for employers of payment of social security contributions (estimated at €218.6 million).

In terms of expenditure, “support for companies and employment reached €2,642.7 million, particularly the Apoiar programme (€1,050.5 million), extraordinary support for the progressive recovery of activity (€520.9 million) and simplified lay-offs (€367.3 million).”

The DGO also highlights expenditure in the health sector, totalling €1,192.3 million, “namely on human resources, individual protection equipment, medicines, vaccines and tests.”

Measures to support family income cost €810.3 million, “with emphasis on extraordinary support for workers” at €437.8 million.

The DGO also points out that “in the absence of the expenses associated to the measures within the scope of Covid-19, the effective expenditure of General Government would have grown by 3.4% compared to the previous year (instead of +5.7%) and effective revenue would have increased by 6.3% (instead of +7.3%). It notes that the accounts do not include the impact of the extraordinary limitation of advance payments of personal and corporate income tax, “which in 2020 is not quantified” but which in 2021 is €1.9 million.

In the first nine months of 2021, the pandemic cost the state €5,381.4 million due to the growth in expenditure of €4,996.1 million and a reduction in revenue of €385.3 million, according to the DGO.

The public sector budget deficit in October narrowed by €650 million compared to the same period in 2020, totalling €6,673 million, according to the Ministry of Finance, in an earlier statement. That note, which refers to the cash flow accounts, also said that “primary spending increased by 7.1% as a result of the extraordinary measures to support the economy and the strong growth dynamic in spending on the National Health Service”, which recorded “a very high increase” of €740 million.