PUBLIC FINANCES

Portugal comfortably meets 2013 deficit reduction goal

Shortfall came in better than targeted at 5 percent of GDP

Portuguese Prime Minister Pedro Passos Coelho.
Portuguese Prime Minister Pedro Passos Coelho.Hugo Correia / Reuters

Portugal narrowed its budget deficit last year to about 5 percent of GDP as it raised more tax revenue than planned, Parliamentary Affairs Minister Luis Marques Guedes said Thursday.

The government had set a 5.5-percent deficit target for 2013 but the figure did not include spending of 700 million euros (about 0.4 percent of GDP) on a capital injection in lender Banif SA. However, the 5-percent figure for the 2013 deficit does include the spending on Banif, Marques Guedes said.

The provisional public administration deficit in 2013 was 7.15 billion euros, beating the limit set in Portugal’s European Union-led 78-billion-euro bailout program by about 1.75 billion euros, the Finance Ministry said in a statement Thursday. Net tax revenue rose 13.1 percent, more than the 8.9-percent increase projected in the budget. Spending excluding extraordinary operations increased 5.7 percent.

The center-right coalition government of Prime Minister Pedro Passos Coelho still has to trim spending by 3.2 billion euros this year to meet targets set in the bailout program after relying mostly on tax increases in 2013. Coelho is trying to regain full access to debt markets with the end of Portugal’s bailout approaching in the middle of May.

The government is targeting a budget deficit of 4 percent of GDP for 2014. It forecasts the shortfall will fall below the EU’s limit of 3 percent in 2015, when it is aiming for a 2.5-percent gap. The deficit was 6.4 percent in 2012.

Separately, Bloomberg quoted Economy Minister Antonio Pires de Lima as saying the economy this year might grow more than the government’s official forecast of 0.8 percent. “Confidence about the Portuguese growth in 2014 is a sentiment that is getting deeper in Portuguese society,” Pires de Lima said. “In the end it might be possible to grow more than 1 percent.”