The capitalisation of Novo Banco drove the Portuguese budget deficit in 2014 up to 7.2 percent of GDP, above the 4.5 percent previously reported, the National Statistics Institute (INE) said Wednesday in Lisbon.

The second notification of the Excessive Deficit Procedure (EDP), sent Wednesday to Brussels, announced that in 2014 the state recorded a budget deficit of 12.4462 billion euros, equivalent to 7.2 percent of Gross Domestic Product.

The value now reported is an upward revision compared to the first notification of the EDP, a situation that the National Statistics Institute explains based on “the inclusion of 4.9 billion euros for the capitalisation of Novo Banco.”

INE stressed that “if the sale of Novo Banco did not happen within a year, the capitalisation would be recorded in accordance with the usual rules as outlined in the Public Administration Deficit and Debt Manual, when capital is applied in a public company.”

For 2015, INE added that the budget deficit reached 4.7 percent of GDP at the end of the first half, higher than the target of 2.7 percent set by the government for the entire year. (macauhub/PT)