The Portuguese public sector maintained a large positive balance in cumulative terms until the end of August, which is happening for the eighth month in a row this year (i.e. since January), the office of Finance Minister Fernando Medina showed in a note released on Friday sent to the editors.
The budget surplus rose again last month, albeit slightly, by another 58 million euros, raising the positive margin (the revenue exceeding expenditure) to almost 2.7 billion euros at the end of August, the same source official indicates. According to the chronological series of the Directorate General Budget (DGO), this is the highest balance recorded at this time of year.
Previously, the second and third largest surpluses occurred in August last year (2.3 billion euros) and in 2019, the year of democracy’s first budget surplus (balance of 404 million euros in January-August), DGO data show consulted by Dinheiro Vivo (DV).
Medina’s office says that “the budget balance amounted to 2,648 million euros”, which is “in line” with the value of a year ago.
In any case and despite the current crisis, the global surplus (in public accounting, the logic of money actually entering and leaving the public treasury) has increased by another 58 million euros, the ministry says.
The Ministry of Finance (MF) reserves that this record balance of almost 2.7 billion euros in August “still does not reflect the full impact of the measures taken in March in response to the geopolitical shock and wage increases in the medium term and pensions”.
For example, the “measures to respond to the geopolitical shock amounted to 1,878 million euros, of which 829 million euros in expenditure,” the ministry said.
Public administration revenues “reflect the resilience of the labor market,” and now “expenditures are growing faster than revenues,” the guardianship says.
Costs increased by 6.7% and effective turnover by 6.5%. At least pretty much the same pace.
Recipe detailed
The revenues, in adjusted terms (ignoring the effect of the huge extraordinary revenues that were this year’s integration of the Caixa Geral de Depósitos Pension Fund), “largely reflect the resilience of the labor market (+11.7% compared to from IRS and 11.4% from social security contributions”.
“Through August, tax revenues rose 4.8%, significantly impacted by IRS revenue growth (+11.7%).”
“Premium income continues to reflect the good dynamics in the labor market and increased by 11.4% compared to the same period of the previous year. Taking both factors into account, growth amounted to 6.8%.”
Costs in detail
The increase in expenditure amounted to 6.7% and was “strongly influenced upwards by the income-boosting measures announced at the beginning of the year (salary increases in public administration contributed to the 7.6% increase in personnel costs ), for social benefits, as well as the reflection of inflation in public procurement,” says the guardianship.
According to the Ministry of Finance, holding back expenditure was “the reduction in expenditure related to the pandemic”.
As mentioned, the MF says that “the impact of the measures related to the geopolitical shock amounted to EUR 1,878 million until August”.
“Of this amount, EUR 829 million consists of measures with an impact on the expenditure side, including support for agricultural production sectors (EUR 186 million), exceptional support for the most vulnerable families (EUR 263 million) and exceptional support for children and young people (EUR 149 million euros)”, the same official message states.
(Updated 7:15 p.m.)
Luís Reis Ribeiro is a journalist for Dinheiro Vivo
Source: DN
