Portugal unlikely to achieve budget deficit target in 2012

4 December 2012

Portugal’s budget deficit in the fourth quarter will need to be less than 4.3 percent of gross domestic product (GDP) in order for the country to meet its target of 5 percent agreed in the financial bailout process, the Technical Budget Support Unit (UTAO) said in Lisbon.

An analysis of budget execution until the end of September led UTAO to estimate that the budget deficit in the first nine months of the year would be between 5.9 percent and 6.3 percent of GDP.

UTAO, which has its headquarters in Portugal’s parliament, also said that meeting the 5 percent budget deficit target in 2012, “implies that in the final quarter there be a deficit that is unprecedented in recent years, even considering the amount expected for concession of the public airport service.”

The problem UTAO said is that the last quarter of the year is usually when the budget deficit worsens, if not taking extraordinary measures Into account.

According to UTAO the situation is worse this year because of “an even greater economic contraction than seen so far,” and the fact that, “an adverse progression of tax revenues may compromise the (new) nominal target for the public deficit.” (macauhub)