Pandemic makes €4.2Bn dent in public finances

Portugal’s public finances were €4.2Bn worse off from March to November according to calculations by the Parliamentary Budget Support Unit UTAO.

The Covid-19 pandemic has required the State to put financial support measures in place to help the economy and National Health Service (SNS), resulting in an increase in expenditure and a reduction in revenues.
To November, the direct impact of the pandemic on Portugal’s public accounts stood at €4.2Bn according to a study by the Portuguese Parliament’s Budget Support Unit (UTAO) and which has been distributed to Portuguese parliamentary deputies.
“The accumulated financial impact of the Covid-19 policy measures totalled €4.296Bn, divided between the €58 million spent on acquiring financial assets and €4.238Bn on government measures with a reflection in the overall balance,” says the report, adding that the figures also result in receipts down by €1.575Bn and added expenditure of €2.663Bn.
According to ECO Online, there is another persecutive in the way public finances have been impacted by the pandemic. The measures destined to support health represent 15.9% of the total value (€673 million) while measures aimed at supporting the health service represent 15.9% or the total value (€673 million), while measures aimed at supporting the economy represent 84.1% if the total amount (€3.564Bn).
In total, the direct impact of the pandemic in 2020 on the budget balance for public accounts already corresponds to around 2.15% of Portugal’s annual GDP in 2019, excluding other non-direct impacts of the pandemic on the public accounts, namely automatic stabilisers as was he case with unemployment benefits.
On the revenues side, the direct impact is largely down to a temporary loss of revenues from the postponement of tax obligations, contributions property rental payments, which in total stood at €1.057 million to November.
This does not include the €518 million of non-recoverable lost revenues because of the exemption of social security contributions and other layoff support, plus a further €1.5Bn on other employee supports measures, followed by family income support measures (€330 million) and additional expenditure (€95 million).