Board of Public Finance warns deficit slippage risk – publico

 
         

                 

                         
                     

                 

 
 

In the first quarter, the budget deficit was 3.2% of GDP, a figure that is higher than expected for the whole year in the OE / 2016 in adjusted terms (2.5%), but an improvement annual 2.3 percentage points of GDP, says the Council report on public finance (CFP), released on Thursday.

the government devalued the value of the deficit, considering it as expected, but the CFP alert to a number of risks that may affect the financial performance throughout the year. Among this risk is that “the increase in personnel expenses”, due to the phasing out of the salaries of civil servants of the cuts and the reduction of the working week to 35 hours in the state from 1 July. Second comes “the negative impact on VAT revenue due to the reduction of the rate of this tax for the catering sector from July and increased expenditure on social transfers other than in kind,” continues the body led by Teodora Cardoso.

the Council includes the risks associated with the financial sector in particular “recapitalization of CGD and clearing the debt of subscribers issued by entities of the Holy Spirit Group sold the branches of Banco Espírito Santo may have negative impacts on the budget balance and debt public. “

and even admits that” uncertainties persist as to the performance of the national and international economy in relation to the provisions of EO / 2016 are other risks that should be marked “.

report points out that the budget deficit for the first quarter “was due either to an increase in revenues, in particular tax and contributory revenue or a reduction in expenditure, including that relating to the investment and interest.”

the annual evolution of public revenues was positive, although lower than expected by the Ministry of Finance (MF) for the whole year. According to the report, “the increase in tax revenue (+ 6%) and contributory revenue (+ 3.1%) attributed the revenue growth.” On the other hand, “non-tax and non-contributory income showed a negative trend, diverging from the target expected by the MF 2016″.

The CFP highlights the decrease in expenditure by 2.7% YoY a “positive evolution” that appears from decrease primary expenditure of both the interest expense. Safety, however, that “the implementation of government expenditure in the first quarter was largely subject to the principle of using a monthly basis, is the exception among others, intended for payment of staff expenditure and charges public debt “.

the public debt ratio in Maastricht optical remained on a downward trend, but almost stabilization, reaching 128.9% of GDP at the end of the 1st quarter. “The nominal GDP growth observed justifies the decrease in the ratio, given that the stock of public debt increased in 1964 million euros in the same period. This increase in stock is due in about three-quarters, the budget deficit (unadjusted) recorded in the period, “can be read in the report.