Portugal gets €1.6Bn budget deficit over Covid-19

 In Economy, News

Portugal’s state budget deficit deteriorated by €341 million like-for-like on 2019 because of a 5% fall in revenue growth.

Set against a growth in expenditure (6.1%), the worsening situation of Portugal’s budget deficit to €1.6Bn for the quarter is a direct reflection of the effects of the Covid-19 pandemic on the “economy and public services.”
By the end of April the State had a budget deficit of €1.6Bn after February saw the greatest budget surplus in Portugal’s democratic history.
“The figures to April show the effects of the pandemic on the economy and public services following mitigation measures,” said the Minister of Finance, Mário Centeno on Tuesday.
The Government says that the effects associated with the pandemic contributed towards a deterioration of the balance by €660 million from a fall in revenues (-€320 million) due to the extension of the time limits for the delivery of payments of tax at source (IRS, VAT and IRC).
The tax authorities note that this data does not yet include the extension of the deadline for social security payments.
On the other hand, expenditure grew by €345 million, mostly because of layoff measures (€144 million), the purchase of health equipment (€128 million) and other support provided by Social Security (€54 million).
“Along with these direct effects, there are various indirect ones associated with the downturn in the economy with an impact on tax revenues and an increase in expenditure on automatic stabilisation measures,” said the minister.
To March, the State budget surplus had fallen to €81 million, partly reflected by the pandemic, with a deterioration of €762 million like-for-like due to a reduction in revenues growth (1.3%) against expenditure (+5.3%).