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The effects of the crisis caused by the pandemic continue to be felt in public accounts. Until September, Portugal registered a deficit of 4.9% of GDP, according to data revealed by the National Institute of Statistics (INE) this Wednesday.
“Considering the set of the first three quarters of 2020, the balance of AP [Administrações Públicas] it stood at -4.9% of GDP (0.7% in the same period of 2019) ”, explains the statistical agency.
In the first half of the year, the State had a deficit of 5.4% of GDP, mainly reflecting the second quarter. In the first quarter, the deficit had reached 1.1% of GDP, but in the second quarter it soared to 10.5% of GDP, which compares with 2.2% of the deficit in the same quarter last year. .
The data published this Wednesday by the INE show that in the third quarter the deficit was 3.8% of GDP, reaching -1,975.6 million euros, which compares with a positive balance of 4.4% in the same period of the year. last year.
“In year-on-year terms, there was an increase in total spending (+ 8.3%) and a decrease in total income (-9.5%),” the report states.
On the expenditure side, there was a 3.9% increase in current expenditure, as a result of increases of 2.9% in social benefits, 4.1% in personnel expenses and 288.1% in subsidies paid. , which reflects the measures to respond to the crisis caused by the pandemic. On the other hand, interest costs decreased (8.6%), while intermediate consumption (0.3%) and other current expenses (8.6%) also decreased.
On the current income side, there was a decrease in all items, except for the 0.6% increase in social contributions. Income from taxes on income and wealth decreased 18.4%, production and imports fell 8.3%, sales fell 7.3% and other current income decreased 22.1%, as a negative impact of the pandemic In the economy. Capital income grew 34.3%, as a result of transfers from the European Union.
TAP triggers capital expenditures
In the third quarter, capital expenditures increased 77.8%, reflecting a 4.6% increase in investment and a 303.6% increase in other capital expenditures.
“The increase in capital investment reflects the registration, based on the information available, of the economic support granted by the State to TAP, SA in the amount of 1,200 million euros as a capital transfer”, explains the INE, underlining that the amount “corresponds to the total amount of the commitment assumed by the State to finance the company, authorized by the European Commission as state aid, taking into account the financial emergency situation of the company.”
The INE also points out that in the main adjustments in the transition from the balance in public accounting to the balance in national accounting, in addition to TAP, the measure of extension of the delivery of IRC form 22 from June to July 2020, registered in the “other amounts receivable – temporary adjustment of taxes and contributions”.
However, the statistical agency explains that “the amount of capital injections and assumption of indebtedness was, almost entirely, destined to entities of the AP sector, not affecting, for reasons of consolidation, the balance of this sector.”
“The remaining differences between these two perspectives are associated with the adjustment of the sectoral delimitation of the PA sector and the temporary adjustment of taxes and contributions,” he highlights, recalling that there was a temporary adjustment to include future payments in the income of the period in which it was generated. . the payment obligation, which meant an increase in accumulated tax collection of around 200 million euros compared to the data of public accounting, of which 100 million already refer to the new measure to extend the payment of VAT due in November, also having a revision in previous quarters.
The Government projects a budget deficit index of 7.3% of GDP this year, according to the estimates included in the macroeconomic scenario that accompanies the 2021 State Budget proposal (OE2021).
(Updated at 11:27 am)
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