Government sees deficit below GDP target of 4.3%

The General Government (GG) recorded a budget deficit of €8,794 million on a public accounts basis in 2021, representing a €2,862 million improvement compared to 2020. The figures were released this Thursday by the Ministry of Finance.

“In 2021, the General Government (GG) deficit in public accounting improved by €2,862 million compared to 2020, reducing to €8,794 million,” the statement announces, specifying that “this improvement is explained by the increase in revenue of 9.3% higher than the growth in expenditure of 5.2%.”

In 2020, the budget deficit, on a public accounts basis, stood at €10,320 million, €9,704 million more than in the previous year. In 2019, Portugal achieved the first budget surplus, on a national accounts basis, in its democratic history. In 2020, the deficit, on a national accounts basis, was 5.8% of GDP.

The government’s last forecast was to close 2021 with a deficit of €9,919 million on public accounts basis, according to the report on the State Budget for 2022 (which was voted down and led to early elections).

This development of the deficit in public accounting – which differs from national accounts, the perspective used for international comparisons – suggests that the government’s target for the deficit this year (4.3%) will be met and even exceeded, as finance minister João Leão has been saying. The deficit up to the third quarter was 2.5% of GDP, and the final figure for the year as a whole will be published by Statistics Portugal (INE) next March.

The Ministry of Finance assumes this, stating that “it should be below 4.3%”. “The evolution of the public accounting balance allows us to anticipate that the deficit, on a national accounts basis, in 2021 will be significantly better than in 2020 (5.8%) and below the limit set for 2021 (4.3%), thus complying with the budget targets for the sixth consecutive year,” the statement said.