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The gross debt of the general government “will have reached 133.6 percent of GDP in 2020 (116.8 percent in the previous year).”
The data released by the INE also indicate that “the balance of public accounting shows a significant deterioration in 2020”, reflecting the direct budgetary impact of the measures taken by the Government in the context of the fight against the pandemic.
The deficit impact of these measures will have increased, the document adds, to around 2.3 percent of GDP..
The INE also highlights that Total PA revenues decreased by five percent between 2019 and 2020 (around 4.6 billion euros)mainly due to the “decrease in taxes on production and imports and current taxes on income and wealth, reflecting the sharp reduction in economic activity in 2020.” As to Total spending on AP increased by 7.8 percent, “as a result of the simultaneous increase in current and capital expenditures, reflecting the measures taken by the Government in the context of the fight against the Covid-19 pandemic.”
In 2020, the global amount of guarantees granted by AP entities amounted to about 7,160 million euros, compared to about 950 million euros granted the previous year “, highlights the INE.
Then, in 2019, Portugal recorded the first surplus in public accounts since 1973, it was expected to return to budget deficits. The covid-19 pandemic has changed the economic scenario and after a period of improvement in public accounts, the scenario returns to high budget deficits.
The forecasts released by the European Commission at the end of last year pointed to a negative budget balance of 7.3 percent of GDP, a figure equal to that initially forecast by the Portuguese Government.
The pandemic will involve reviewing the growth of the economy
In reaction to the data released by the INE, this Friday, the Finance Minister said that the budget deficit was lower than expected, a result of the resilience of the Portuguese and the labor market, and that a pandemic will imply a review of economic growth. this year, also thanking the “effort” of employers, workers and families in the context of the pandemic.
“The pandemic will imply a review of the growth of the economy this year”said João Leão, at a press conference. Yet, “The budget deficit was below the last official government forecast and closer to the one presented in June of last year, when the Supplementary Budget was approved.”
“The evolution of public finances less negative than expected, as a result of the better performance of the economy and in particular of the notable resilience of the labor market”, since the unemployment rate was lower than expected, he explained.
This is, “the country has managed to withstand the crisis better than expected”.
João Leão took advantage of the moment, at a press conference, to praise “employers, workers and families for the admirable resilience they have shown in adapting to a very difficult and adverse context”.
What’s more, “The remarkable evolution of the labor market reflects well the effectiveness of the policies to support companies and workers”, stressed.
However, this year, the minister said, “the pandemic is having a stronger impact than anticipated”, which should lead to a smaller deficit reduction in 2021 than expected.
As for public finances, the evolution and reduction of the budget deficit expected for this year will be much lower “said João Leão.
The Minister of Finance has also pointed out that the exceptional support to the economy, companies and health in 2020 stands at some one billion euros higher than expected.
“The Government is prepared to continue supporting businesses and families throughout the pandemic. […] The economy can now recover strongly from the crisis and we can look to the future with more confidence. “, he stated.
Also in reaction to the INE data, António Costa affirmed that it is necessary to relaunch the economy and that this was one of the “largest deficits” in the country.
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This deficit is explained by the great effort that we have made to support companies, employment and household income ”, António Costa continued. “But also to relaunch investment, specifically in Education”he added, highlighting the asbestos removal process of various institutions
