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The Portuguese state registered a budget deficit of almost 7,200 million euros until October, according to data published today by the Ministry of Finance. This figure represents an increase in the deficit of almost 8,200 million euros compared to the same period last year.
What justifies this deficit? João Leão’s tutelage points the finger at the Covid-19 pandemic and the “combined effect” of the 6.4% reduction in income with the 5.1% increase in spending, “either by its unfavorable impacts on the economy associated with a marked reduction in tax and tax revenues; or due to the increase in expenses associated with extraordinary measures to support families and businesses. These effects already justify an additional increase in the balance until October of at least 3,865 million euros ”.
On the income side, the Ministry of Finance points out the impacts of the suspension of payments on account (less 719 million) and the extension of withholdings at source (IRS and IRC) and the payment of VAT, the suspension of embargoes of income and measures of exemption or reduction of the contribution rate (minus 240 million).
At the same time, tax revenues also decreased due to the “exemption from the payment of TSU in the simplified dismissal regime, support for progressive recovery and financial incentive for the normalization of business activity estimated at around 477 million in October.”
And on the side of increased spending? João Leão’s ministry points to an increase in spending of 2,357 million euros, which is mainly due to dismissal measures with an impact of 875 million euros. This is followed by the acquisition of sanitary equipment (430 million), other support supported by Social Security (461 million) and in the field of the extraordinary incentive for standardization (221 million).
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