The economic crisis has caused the Portuguese state deficit to soar to 7.3 billion euros in the first half of 2009.
That means that the state rings up a debt of 40.5 million euros a day according to the Directorate-General of the Budget.
In other words, the economic crisis, coupled with last year’s spiralling fuel prices, the current unemployment situation and falling tax revenues has caused a headache for Finance Minister Fernando Teixeira dos Santos’ public accounts deficit which has quadrupled in six months.
However, the minister believed last week that Portugal’s ‘overdraft’ had now “hit the bottom” while admitting that the government had an extra 5.4 billion euro debt around its neck compared to the same period last year. Revenue particularly suffered because of falling tax receipts which totalled 13.8 billion euros, down a massive 21.6 per cent on 2008.
This was partly influenced by an increase in Value Added Tax and Income Tax refunds as well as the reduction in VAT from 21 per cent to 20 per cent last year.
Overall government expenses increased by 5.4 per cent to 23.4 billion euros largely because of unemployment benefit payouts, job-seeker allowance programmes and paying public sector debts to creditors.
In the case of Social Security payments, these increased by 10.6 per cent largely because unemployment benefit had shot up by 24 per cent.
The Minister gave his assurances that public accounts were “under control” and suggested there would be a recovery starting from this month while at the same time dismissing the idea of raising taxes or re-jigging the budget to correct the amount of the debt.