Portugal records budget surplus of €6.2 billion for 2023 so far

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Portugal recorded a budget surplus in public accounts of €6.2 billion for the year as of October, which is €3.4 billion more than for the same period last year, Portugal’s Finance Ministry said on Thursday.

In a statement, the ministry headed by Fernando Medina said that, despite the year-on-year improvement in the adjusted budget balance up to October, the surplus fell by €1.06 billion compared to the previous month.

The evolution of the surplus in year-on-year terms results from an 8.9% improvement in revenue, which is higher than the 4.9% increase in expenditure.

The figures released today by the government, in anticipation of the budget execution to be published by the Directorate-General for the Budget, are adjusted for the effect of the integration of the Caixa Geral de Depósitos Pension Fund (FPCGD).

The improvement in actual revenue reflects, above all, the resilience of the labour market, while the increase in actual expenditure (which rises to 7.5% if adjusted for the effect of COVID-19 measures and the impact of the geopolitical shock) is “strongly influenced” by “income-boosting measures, social benefits, as well as the reflection of inflation in public contracts”.

Until October, tax revenue grew by 9.1%, significantly influenced by the increase in direct tax revenue, while tax revenue rose by 11% year-on-year.

The year-on-year increase in expenditure up to October “continues to be driven by salaries, the purchase of goods and services, investment and social benefits”.

The Finance Ministry pointed to social benefits spending growing by 16.7%, largely reflecting updating the Social Support Index (IAS) and pay rises.

Expenditure on personnel increased by 7.7%, spending on acquiring goods and services grew by 6%, and expenditure on investment in Central Administration and Social Security rose by 15%, excluding PPPs.

The figures released by the DGO are from a public accounting perspective, which differs from national accounting, released by the National Statistics Institute (INE) and traditionally used in international comparisons.

(Ânia Ataíde, edited by Cristina Cardoso | Lusa.pt)