The International Monetary Fund has doubts that the high rate of VAT revenue growth registered in the first months of the year can be maintained in the second half of 2015, representing a risk to the achievement of budgetary targets by the Government.
In the second report of the Portugal post-program monitoring published on Thursday, the Fund would again stress that “there is a tangible risk that the budget deficit target of 2.7% of GDP is not achieved without additional restrictions on expense. “
And one of the main reasons he gives for these doubts is that it does not believe it is possible to maintain the pace of the VAT revenue growth in the period from January to May. The problem, the IMF says, is that, in addition to higher levels of consumption and compliance with the rules, what is contributing to the high rate of VAT growth is “slowing payment of refunds in the first quarter, during the transition to new verification procedures. “
The Fund provides that this effect will be diluted in the rest of the year. “The payment of VAT refunds began to recover in the second quarter and is expected to further accelerate during the remainder of the year,” the report says, an idea that runs counter to what has been argued by the Government this week.
The effect of payment of VAT refunds in the pace of net tax revenue growth has entered the national political debate after the government announced that, at the current rate of VAT revenue growth and the IRS, may be held at the end of the year to a return of 100 million euros in the surcharge. Opposition parties doubt this expectation and point out that the growth of VAT revenue is due to the slower pace of repayments, something that can not keep the rest of the year.
The Government, however, states that the lowest level of repayments is due to the application of tighter checking rules, making it possible to maintain the same pace until the end of 2015. “It is expected that the VAT refunds in 2015 are reduced from the levels seen in previous years, as a result of new legal and operational rules for monitoring, inspection and correction of these tax refunds, “said the Ministry of Finance in a statement.
The IMF seems to have doubts about this government projection and strengthens its expectation that the deficit target for 2015 might be concerned, because at the same time, “the data for the period from January to May suggest that revenues from the IRS and IRC can stay below the OE goal.”
The IMF reaffirms a 3.2% deficit forecast this year, with a deterioration of the structural deficit of 0.7 points.
Against this backdrop, the solution proposed by the IMF back to the application of the expense reduction measures to achieve the budgetary targets. The appeal is made especially for the coming years, for which the Fund says that the government has ambitious and correct budgetary targets but without measures are provided “concrete” and “credible” to support them.
“The stability program of the authorities [Portuguese] defines appropriately ambitious goals, but this needs to be accompanied by credible measures to achieve the fiscal adjustment that is needed,” said the executive board of the IMF.
The report notes in particular that the savings estimated by the Government to the public wages, social benefits and pensions “seem over-optimistic when compared with the recent trend of spending.”
In addition, the IMF back appeal that Portugal proceed to “cautious” manner in reversing some of the austerity measures implemented in recent years, including tax level. And warns: “lower revenue than projected or insufficient adjustment of spending would require the postponement or cancellation of the partial reversal of IRS surcharge, the extraordinary contributions in the energy and natural gas and the reform of taxes on real estate.” Even the descent of the IRC that the IMF agreed last can be called into question and must be “carefully evaluated each year.”
No comments:
Post a Comment