UTAO: expenditure restraint saved deficit but are needed additional measures – Daily News – Lisbon

Budget in the second half involves risks Execution, says independent unit

The analysis for the first half 2016 accounts sent Wednesday by the Technical Unit of Budget Support (UTAO) to Members, points to an improvement in the deficit to 2015, but makes clear that these positive results stem from a strong expenditure restraint, which turned out to offset the bad revenue performance.

According to the report, there are even lines whose growth is expected for the rest of the year, which recorded decreases year on year, threatening the success of the budget. Although providing significant risks in the second half, the annual target deficit remains achievable.

The technical highlight, however, that “the European Commission considers that Portugal should adopt and implement additional consolidation measures in the amount of 0 25% of GDP in 2016 “. The document points out that the country should “remain available to take additional measures if the risks surrounding the budget forecasts materialize.” The Prime Minister, however, has ensured that not promised to Brussels any additional measures.

“Portugal should complement savings with measures on the revenue side that may increase indirect taxes, by broadening the base tax incidence and reducing tax expenditures, “writes UTAO, according to the Economic.

UTAO estimates that the budget deficit has been located in the EUR 2 280 million in the first half. In annual terms, if recorded, therefore an improvement in the budget balance of 852 million, which means that the Government has won 63 percent of the annual improvement (the goal is 1 355 million for the full year) only in the first half of the year.

Still, there are other factors to consider in the second half accounts, including greater devolution of pay cuts in the state, the week of 35 hours of work and the reduction of VAT on restoration. In addition, the Government has already implemented 69 percent of the annual deficit being slightly above 67 percent the previous year. According to the document, there is still to take into account the possible unsustainability of expenditure implementation profile, in particular subsidies, investment and procurement of goods and services.

“In the first half, both running the revenue and expenditure execution fell short of the planned “, warns UTAO the document, quoted by Business.

” in terms of actual revenue, there is a negative deviation, especially other current revenue and the capital revenue, but also the tax revenue and social contributions, “he said. “In turn, the actual expense showed a degree of execution below the same period of 2015, the level of subsidies, investments and procurement of goods and services,” he adds.

In the first half of 2016 spending on goods and services fell 2.1 percent (the budget provides for an annual increase of 1.5 percent), followed by the trend capital expenditures (which fell 4, 3 percent year on year, which should It is compared with an expected increase of 19.2 percent year on year) and the expenditure on subsidies (which fell 2.1 percent as we anticipate a 1.5 percent increase in the year.) the health sector in particular, is, however, recorded an increase in debt.

Until June, the effective spending grew 1.4 percent, below the 5, 9 per cent projected in the budget for this year. Already effective revenue increased 1.3 percent, compared with growth of 4.4 percent expected for the full year.

According to the assessment of UTAO, “the implementation of the second half carries risk as it will be to predict the acceleration of the implementation of certain expenses (…) in a context where economic activity should grow at a slower pace than envisaged in the State Budget for 2016 “.

on 15 October, Portugal (and Spain) will report on the progress made in adopting the Commission’s recommendations, which must be specified measures to be taken.