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“This evolution of the deficit, justified by the pandemic, is due to the combined effect of the reduction in income (-6.4%) and the increase in spending (+ 5.1%), or due to its unfavorable impacts on the economy associated with the sharp reduction in tax and contributory income; either due to the increase in spending associated with extraordinary measures to support families and businesses, ”reads a financial note anticipate the publication of the summary of the General Directorate of Budgets.
These effects already justify an additional increase in the balance until October of at least 3,865 million euros, “the statement added.
To explain the drop in income, the João Leão ministry points out the impacts of the suspension of payments on account (minus 791 million euros) and the extension of withholdings at source (IRC and IRS) and payment of VAT, of the suspension of income executions and measures of exemption or reduction of the contribution rate (minus 240 million euros).
To these effects is added the impact of the loss of tax income due to the exemption of the payment of TSU in the simplified dismissal regime, the support for progressive recovery and the financial incentive for the normalization of business activity estimated at about 477 million euros until October ”. the statement said.
The Ministry of Finance estimates an increase in spending of 2357 million euros, mainly associated with dismissal measures (875 million euros), acquisition of sanitary equipment (430 million euros), other Social Security aid (461 million euros) and in the field of extraordinary incentives for standardization (221 million euros). euros).
Social Security contributions also fell 1.3 percent, as a result of “the slowdown in economic activity and the most intense months of the simplified dismissal.”
At the time, primary spending grew 6.4 percent, “influenced by the strong growth in spending on Social Security (12.8 percent more, that is, 2,743 million euros more), of which some 1,623 million euros associated with Covid-19, which already represents 84 Percent of the budget charged to the Supplementary Budget, anticipating its full execution. ”
Investment in the NHS reaches “all-time highs”
In responding to the pandemic, the Ministry of Finance stresses that Spending by the National Health Service (SNS) “increased at a very high rate of 5.8 percent.”
To this increase in spending, the tutelage of João Leão explains that the extraordinary increase in investment contributed (another 108 percent), reaching 217 million euros, an increase of 40 percent compared to the total execution of 2019 (156 million of euros). euros) and the increase in personnel costs (6.1 percent), also associated with the 5.2 percent increase in the number of health professionals in the SNS in October, representing another 6,861 workers.
Still in the SNS, the Treasury note says that “the SNS leads the reduction of arrears.” According to the Ministry, arrears were reduced by 303 million euros compared to October 2019, which is justified by the decrease in arrears in the SNS by 335 million euros.
