Government spends €4.6Bn in aid

The Portuguese government has already spent €4.6Bn in State aid to offset the economic impact of the pandemic.

Between an increase in expenditure and loss of revenues, the amount represents around 2% of GDP. The lion’s share of the money was spent on the National Health Service (SNS), job protection and State aid to companies and citizens in 2020.
But the bill is likely to be even greater in 2021 with the current lockdown weighing on public accounts.
Data from the budget shows that the pandemic “required” a direct increase of €3.1Bn of public expenditure and saw a direct reduction in public revenues of €1.4Bn in 2020.
And this was the direct impact of measures. The pandemic also had indirect collateral effects such a fewer taxes collected due to a downturn in economic activity, and a greater expenditure on unemployment subsidies caused by the destruction of jobs posts.
As to the measures adopted by the government last year, emphasis goes on the simplified lay-off regime whose objective was to save jobs in those companies most affected by the crisis.
This regime set the government back by €882 million, including complementary payments to staff that were on lay-off in 2020.
To this expenditure can also be added €284 million spent on the extraordinary incentives paid to companies that adopted the lay-off regime.
Then, on top of this, is the €508.7 million that the Institute of Social Security Financial Management lost on giving exemptions on payments of the Sole Social Tax (Taxa Social Única) given to employers in the case of workers on lay-off.
Then there is the direct expenditure on the pandemic, particularly the National Health Service, which skyrocketed to €794.3 million in extra working hours payments, equipment, drugs and vaccines.
Another hefty bill was down to the suspension of IRC tax payments which took €695 million from State revenues.
And without all these additional costs caused by the unexpected pandemic, public expenditure would have grown 1.8% (instead of the 5.3% now) while public revenues would have fallen 4% instead of the 5.6% now according to estimates from the Directorate-General of the Budget.