Portugal’s budget deficit in 2015 may exceed forecast

25 September 2015

The Portuguese budget deficit in the second half of 2015 will need to be 0.9 percent of GDP or less for the government to meet the 2.7 percent target set for 2015, the Technical Unit for Budget Support (UTAO) warned Thursday in Lisbon.

The budget deficit reached 4.7 percent of GDP in the first half of 2015, according to figures issued Wednesday by the National Statistics Institute (INE).

In a quick note on the national accounts for public administration in the first half of 2015, UTAO said “the budget result for the first half jeopardise fulfilment of the annual deficit target and may affect the closure of the Excessive Deficit Procedure.”

According to the accounts of independent experts who work with the Portuguese parliament, the deficit registered between January and June this year “in nominal terms is about 84 percent of the total projected deficit for the year as a whole and approximately 80 percent of the deficit adjusted for extraordinary measures.”

As regards the closure of the excessive deficit procedure, which Portugal is subject to due to having a budget deficit of over 3 percent of GDP, UTAO said the exit from this mechanism “may be at risk.”

“Taking into account budgetary performance in the first half, for the budget deficit to fall below the benchmark value of 3.0 percent of GDP the deficit in the second half needs to be less than 1.4 percent of GDP,” the UTAO experts said. (macauhub/PT)