For the first time in the last eight years, the deficit in the Portuguese public was below the threshold of 3% of GDP over a full semester. The value of 2.8% registered during the first six months of this year is still well above 2.2% which are the objective of the Government and of the 2.5% that is currently required by the european authorities for the whole year.
The data were released Friday by the National Statistics Institute and are the first indicators for the development of public finances until June in the national accounts, the methodology used by Eurostat to validate the values of the public deficit of the countries of the EU. The Government presents, with a monthly periodicity, data in public accounting, in which expenses are recorded on an optical box.
The public deficit of 2.8% of GDP in the first half of the year is an improvement on what happened in the same period of last year and the first quarter of this year. In the first six months of 2015, the deficit had been of 4.6% of GDP, while in the first quarter of this year, the value recorded was 3% (there was a downward revision from the 3.2% reported by the INE in June).
The improvement happened because, during the period from April to June this year, the deficit was of 2.5%.
The data presented now come against what the Government has been defending: that the value of the deficit will come down throughout the year, until we get to a set goal. However, the fact that, during the first half of the year, if you register a value that is still above the target outlined in the budget and, especially, of the demands made by european authorities, should continue to be a cause of apprehension for entities such as the European Commission and the International Monetary Fund that have been alert to the possibility of an increase of the pressures on the budget execution in the final phase of the year.
The result obtained in the first half of the year is clearly above the target established by the Government in the Budget of the State for the entirety of 2016 and that was 2.2% of GDP. And also exceeds the 2.5% required by the Commission to Portugal to correct its breach of budgetary rules in europe.
In Brussels, argues that, to meet that goal, Portugal still needs to adopt new measures in the amount of 0.25% of the GDP, around € 400 million, asking that these measures be made known until the next day, 15 October, at the same time, with the announcement of the proposal of the State Budget for 2017.
From the Government side, the discourse has been that the budget execution is proceeding according to plan and that you will not need more measures to reach the targets. In the reporting of the deficit and the debt, also delivered this Friday by the INE to Eurostat, the Government continues to point to a deficit of 2.2% of the total in 2016, as he had done when he presented the budget. And in reaction to the data published by the INE, the Ministry of Finance says that they confirm “the path of rigor outlined in the State Budget, which was continued in budget execution, July and August, and that will allow the output of the Procedure for Excessive Deficit”.
however, looking at the data now known for the first half of the year it is visible the effort that still has to be done to meet the objectives. If you want to achieve a negative balance of 2.2% at the end of the year, as provided in the state budget, the Government must be able to ensure a deficit in the second half of the year less than or equal to 1.7% of GDP.
And if content to meet the requirement of 2.5% of the european authorities, even so must point to a deficit of 2.2% from July until December. These values are better than those recorded during the second quarter of the year.
With the economy growing at a pace lower than that which served as the basis for the State Budget and the habitual pressure on the spending that occurs at the end of the year, numbers so favorable it may be difficult to achieve. And this without counting with the effect of the capital injection should come to be made in the General Box of Deposits.
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