There is no deficit slippage in Portugal: The country ran a budget surplus last year of 1.2% of its GDP, after a deficit of 0.3% in 2022, according to a preliminary estimate published by the National Institute of Statistics on Monday. (Eni). This is the second time since the advent of democracy in 1974 that Portugal has achieved an annual budget surplus, after the 0.1% recorded in 2019.
This historic result, which can be explained by the increase in tax revenues and social security contributions last year, is higher than the expectations of the outgoing Socialist government, which was counting on a surplus of 0.8% of GDP. This year, Portugal is expected to achieve a new surplus of about 0.2% of GDP, according to this government’s forecasts.
Public debt decline
The Portuguese Statistics Office also confirmed on Monday the decline in public debt, which fell below the threshold of 100% of GDP last year for the first time since 2010, reaching 99.1% of GDP.
The consolidation of the public accounts of the Iberian state, which had to undergo severe austerity treatment in order to overcome the eurozone debt crisis in 2011, in exchange for an international financial aid plan, is historic. Portugal has regained its financial credibility, and the three main financial agencies, responsible for assessing countries' ability to repay their debts, assess Portugal's financial position at level A, which corresponds to good solvency.
The positive budget balance of €3.2 billion achieved in 2023 is the result of a 9% increase in revenues resulting from “Basically positive development of tax revenues and contributions.”The National Institute of Statistics noted. Meanwhile, public spending rose by 5.2%. “This performance is the result of stronger than expected economic growth.”with “More jobs and higher wages”The Ministry of Finance responded in a press release. In 2023, Portugal will record economic growth of 2.3%, among the strongest rates in the European Union, mainly due to a recovery in exports.
For this year, the Bank of Portugal revised its forecast upward on Friday, now forecasting GDP growth of 2% compared to the previous estimate of 1.2%. But the Portuguese Central Bank warned of the risks associated with this“Uncertainty in economic behavior” Because of the new political situation.
New centre-right Prime Minister Luis Montenegro, who is scheduled to take office next week, the winner of the legislative elections held on March 10, has promised to increase the salaries of certain categories of civil servants.
