According to the UTAO, the pandemic, surging inflation and the war in Ukraine, and spending as part of the RRP altogether added a negative €1.403 billion to Portugal's public sector accounts.
Measures to mitigate the impact of the Covid-19 pandemic, surging inflation and the war in Ukraine, and spending as part of the Recovery and Resilience Plan (RRP) for post-pandemic recovery altogether added a negative €1.403 billion to the public sector accounts in the first four months of this year, according to a parliament’s research unit.
According to a report released on Tuesday by the Technical Budgetary Support Unit (UTAO) analysing budgetary developments from January to April, on a public accounting basis, “the known direct effect of the measures to mitigate the damage of Covid-19 and the ‘inflation and Ukraine’ package, as well as the RRP measures, worsened the overall balance by €1,403 million.”
The unit, which exists to provide expert support to members of parliament, highlights that the Covid-19 policy measures “damaged” the overall balance by €1.239 billion, or “significantly” less (€1.052 billion less) than the same period last year, when €2.290 billion was spent for that purpose.
The report also indicates that expenditure on policy measures to mitigate the effects of inflation on household purchasing power and on production costs in certain sectors affeced by the war in Ukraine worsened the budgetary position by €165 million.
Expenditure on implementation of the RRP, on the subsidies side, amounted to €54 million, “but its impact on the overall balance is nil, since up until the end of April it was entirely funded by community [EU] subsidies.”
The UTAO also recalls that, according to the state budget for 2022, a “significant reduction” is expected for the whole year compared to the execution of 2021 of the public sector financial effort on measures to combat the effects of the pandemic.
The budget, it notes, “foresees that the measures of the ‘inflation and Ukraine’ package will worsen the overall balance more than the Covid-19 measures [and] predicts that the implementation of the RRP will involve a very significant amount of expenditure and a relatively small impact on the balance.”