To meet the deficit target agreed with the European partners, 4% of GDP, the government has to get in the second half, an effort of fiscal consolidation that is “almost double” the improvement in the deficit recorded in the six first months of the year.
Calculations are the Technical Unit for Budgetary Support (UTAO), which in a note published on Thursday warns some budgetary pressures by the end of the year, although the increase in tax revenue is to help fix the deficit and not expect some negative impacts on the expenditure side.
In the “quick note on national accounts of government” of the first half, technicians UTAO report that the deficit amounted to 6, 5% of GDP in the first six months of the year (equivalent to EUR 5600 million), exceeding the target set for 2014.
According to the six technicians who provide support to Parliament, this difference “not fails to put pressure on the fiscal performance that will be necessary to reach the second half. ” And to achieve the annual target, “it will be necessary that the second half of the deficit amounts to 3.1% of GDP semester.”
If January to June the fiscal consolidation effort, measured in optical accounting national, amounted to 0.8 percentage points of GDP semester in the second half of the year the improvement in the deficit will have to walk “in the order of 1.5 percentage points of GDP every six months, almost double the achieved in the first half.”
Although consolidation “is more challenging” for the period July to December, says UTAO, one must keep in mind that there are differences over the first half “that can benefit the additional deficit reduction.” One has to do with the payment of holiday pay.
As this year’s 14th month has already been processed, the impact on public spending is already accounted for, unlike what happened last year, that expenditure had effect only in the second half of the year, because the allowance was only paid to pensioners and public employees in November, by decision of the Government.
There are other data on budget execution that is covering the deviation in expenditure and that can help relieve the pressure in the final stretch of the year. The synthesis of budget execution, presented in public accounting, shows that until August “in order to balance the budget in nominal terms is likely to be achieved via more tax revenue, compensating divergence at the level of public expenditure.”
At the same time, “if confirmed an execution of the program terminations by mutual agreement falls far short of what was planned by the Ministry of Finance” when in late August approved the State Budget Amending and there are, therefore, that expenditure on the payment of compensation, “leaves some room to accommodate possible unfavorable deviations.”
Reviewing accounts aggravates debt
UTAO also noted that the entry into of the new system of accounts at European level came to bring “significant” changes to the accounting deficit and debt .
In case of deficit , “the largest revisions occur in all years in which there were transfers of pension funds to the government sector. These transfers no longer benefit the budget deficit in the year they occurred and, likewise, the payment of pensions that generate in subsequent years longer encumber the public accounts. “
Regarding debt, as rules require to include new entities in the general government sector, since the classification criteria have changed, the debt of these entities resulted in an increase in public debt, which “also contributes to the worsening of the deficit, given that they loss of the whole organization. “
” The funding awarded to two public companies, Carris and the STCP, and the consequent recognition of your total debt as public debt “had a negative impact on the balance of administrations public in the order of EUR 1 192 million.
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