The battle of the ministers: nasty row erupts between finance ministers over public spending accounts

 In News, Public deficit and Budget deficit, Public Finances

Portugal’s current minister of Finances, Joaquim Miranda Sarmento, is in a lock-of-horns with former PS Socialist Party minister of Finances, Fernando Medina, over the state of Portugal’s public finances in the first quarter of 2024.

Miranda Sarmento claims that the outgoing minister had cooked the books to hide discrepancies in accounts that effectively wipe out the 0.7% surplus trumpeted by Medina before leaving office.

Instead, the new government claims that the true balance of public spending has left an almost €600 million black hole in the country’s financial accounts.

The two politicians got into a very public spat after Miranda Sarmento had pointed the finger at some “worrying situations”in Portugal’s public accounts, and accused the previous government of “electioneering” and approving expenditure after the elections on March 10.

Fernando Medina, however, argues that the accounts were open for everyone to see during the handover period between the two governments and do not undermine the surplus expected for 2023.

He said that the public accounts balance had been confused with the national accounts balance.

The former Finances minister accused Miranda Sarmento of either being “technically inept or politically insincere”.

The problem came to light after the budget implementation to March 2024 revealed that it went from a surplus of €1.1Bn in January to a deficit of around €259 million.

According to Miranda Sarmento, delayed payments of around €300 million should have been added to the balance, which results in a deficit of almost €600 million in the public accounts.

“To March 31, the previous government committed a substantial part of Ministry of Finances reserves”, said Miranda Sarmento at a press conference after a meeting of the Council of Ministers, in addition to “approving exceptional expenditure of €1.8Bn, of which €950 million (was approved) after the elections”, he said.

The minster identified 108 Council of Ministers resolutions approved since the resignation of António Costa, three of which were of a “significant amount” and amounted to promises that could not be accommodated in the budget.

These included €100 million of support to farmers to counter the drought in the Alentejo and Algarve; €127 million to refurbish Portugal’s schools stock, while €300 million owed to suppliers should have been added to a €259 million deficit between January and March. All told there is an alleged negative balance of almost €600 million.