Portugal’s annual budget shrinks to €536 million

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Portugal’s annual budget deficit to June 2019 shrank to €536 billion, a like-for-like improvement of €2.1 billion on the same period in 2018.

Revenues continue to grow five times more than expenditure according to figures announced this week by Portugal’s Minister of Finance, Mário Centeno.
In May the deficit was €637 billion which means that Portugal’s deficit improved by the end of June.
This development does not yet include the impact of new EU rules governing budget controls that came into force at the end of June and which will demand revenue collection to offset expenditure foreseen in the State Budget of 2019.
Mário Centeno stressed that the budget balance reflects “Portugal’s positive economy and budgetary discipline” without taking into account any outlook regarding meeting the 0.2% GDP target foreseen for the deficit — in June the Ministry of Finance referred to it being “viable to meet the budgetary target.
In August the National Statistics Institute (INE) will publish its first estimate for Portugal’s budget accounts which will be based on the performance of the economy in the first half of the year.
In the first quarter, the Government calculated a budget surplus of 0.4% which was met with approval from Brussels.
Centeno said “tax revenues grew 7.6% and highlighted the increase in revenues from VAT 9.3%, ISP tax on petroleum products by 11.2% by 11.2% and IRS by 3.7%”.
“This growth has taken place despite a reduction in the tax burden associated to various taxes, such as IRS (because of the impact of the reform to the number of tax brackets), to VAT (from the reduction of the rate of various goods and services) and the ISP (from the reduction of tax levied on petrol by three cents)”.
The reduction in the deficit is also down to the employment market which has boosted revenues in terms of social security contributions which increased by 8.6% to June.