With a more positive result than in 2019 and much higher than it expects for the whole of this year, the government has reached mid-2022 with a budget result unprecedented in recent decades: a surplus of close to 900 million euros, or 0.8% of GDP. .
Positive balance in public accounts During the first semester He, in the series published by the National Institute of Statistics (INE) since 1999, is the only one on record. Not even 2019, the year in which the first budget surplus was achieved since 1973, had it reached the middle of the year with a positive balance. Last year, in the same time period, public accounts posted a deficit equal to 5.7% of GDP.
The result obtained also places the Portuguese budget balance at a completely different level than what has been, so far, the target set by the government for the whole year. This month, the finance minister reiterated the government’s estimate of a 1.9% deficit in 2022.
The explanation for the positive equilibrium is much more than initially anticipated, mostly, in the strong increase in tax revenue, particularly due to the positive effect of higher inflation on the collection of indirect taxes such as value-added tax.
On the government’s part, the rhetoric has been that it does not intend to exceed its deficit target, using the margin provided by the tax increase to support families and businesses in a high inflation scenario. The government expects, as Fernando Medina assumed, that in the second half of the year, with the implementation of support packages for families and businesses, the budget result will deteriorate. The finance minister specifically referred to the support to be given to households in October as a “VAT refund” that was paid more than expected due to inflation.
However, there are those who doubt that even with the support provided by the state at the end of the year, the deficit will still be at the level expected by the government. The Public Finance Council expected, on Thursday, that in a scenario in which no new measures will be announced, Portugal’s budget deficit this year will remain at 1.3%.a figure lower than the 1.9% expected by the executive branch.
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