Portugal’s public finance deficit 1.9% in first half

In the first half of the year, Portugal’s public deficit was 1.9% of GDP – above the Government’s 0.7% target for 2018.

And according to Portugal’s Council for Public Finances, headed by economist Teodora Cardoso, the Government will eventually be able to reduce the public deficit to 0.5%, an amount which is below the 0.7% planned.
It represents a deterioration in the country’s public finances in the first quarter of the year but nevertheless is a slight reduction on the figures for the same period in 2017. The result, which is clearly above the target outlined by the Government for the whole year of 0-7%, was influenced by the capital increase for Novo Banco from the Bank Resolution Fund to the tune of €792 million during the second quarter.
Data released from the Portuguese National Statistics Institute (INE) on Friday (today) revealed a deficit of 1.9% in the first six months of the year, worse than the 0.8% recorded in the first quarter of 2018, but which positively compares with the 6.2% registered in the first half of 2017.
However, on closer analysis, a number of factors have to be taken into consideration which reflects the apparent deterioration in Government and public finances, namely cash injected by the Portuguese State for the recapitalisation of Caixa Geral de Depósitos (CGD).
Subtracting this extraordinary cost, the public deficit in the first half of 2107 would have stood at 2%.
In 2018, in the second quarter, the Resolution Fund (which is included in the Public Administration Finances), made a capital increase into Novo Banco worth €792 million and if this amount is subtracted from the deficit for the first half of 2018, the Government deficit would be 1.1% of GDP and not 1.9%.