Portugal returns to the red
The health crisis which has paralysed the Portuguese economy has put the country’s finances back in the red after 10 years of hard work trying to reduce the deficit.
The minister of Finances, João Leão says that Portugal’s public finances will show a negative balance for 2021 when he presents the government’s Stability Program this month, admitting that the budget deficit will be between 4.5% and 5% of GDP, above the previous forecast of 4.3%.
In 2019, when Mário Centeno was the minister of Finances, Portugal achieved its first budget surplus in public accounts in the country’s democratic history, with a positive balance of 0.1% of GDP and would have had a similar value forecast for 2020 had the pandemic not hit, which led to a deficit of 5.7% of GDP last year.
Regarding accumulated public debt, this increased from 114% of GDP in 2011 to a record amount of 133.6% at the end of 2020, after having in 2019 achieved the lowest value since 2011: 116% of GDP.
At the end of last year, and according to provisional data from the national statistics institute (INE), total public administration debt was €270.4Bn.
As to economic activity progression, after three years of GDP contraction between 2011 and 2013, the Portuguese economy began to grow in 2014, even of modestly (0.8%), progressively climbing to a peak of 3.5% in 2017 before falling back in 2018 and 2019 to 2.8% and 2.5%.
In 2020, Covid-19 dragged the national economy once again into negative terrain, with a contraction in the economy falling 7.6% (the sharpest annual contraction since INE records began).