Budget surplus triples to September
Portugal’s budget surplus grew almost three-fold on what had been announced in August to €7.2Bn to September.
In August the budget surplus had been calculated at €2.6Bn according to the Finance ministry that has explained the improvement in Portugal’s public finances by 0.8% of GDP to a “resilience in the labour market”.
Effective revenues increased by 8.5% with adjustments thanks to a growth of 12.1% in income tax revenues and 11.2% in national insurance contributions.
But expenditure grew as well because of the Covid-19 financial aid measures put in place by the government, and the impact from the geo-political shock from the War in Ukraine and its resulting impact on energy and food prices. Exacerbated by the crisis in the Middle East, these have caused a €870 million dent in public finances as the government has provided aid to agriculture and poorer families in need.
The tax authorities also calculate a negative impact on revenues of around €1.1Bn because of a “reduction in taxes on fuels and basic consumer foodstuffs.”
There was also increased inflation-related expenditure (+4.8%) on the acquisition of goods and services and higher education (23.5%), as well as local government (13.2%).
Inflation too is weighing on public contract expenditure with investment in Central Administration and Social Security up 8.9% overall. The expenditure on investments on Porto’s metro skyrocketed 168.8% and on railway infrastructure projects by 40.5%.