Public deficit falls €971 million to June

Good news at last for Portugal’s government struggling to convince Brussels that it has a grasp on the economy.

According to data coming out from the finance ministry, Portugal’s deficit has fallen by €971.2 million compared to the figure for the same period last year.

The fall, registered for the first six months of 2016, is largely due to the increase in taxes on fuel and tobacco, responsible for €712 million. Thus it is certainly ‘good news’, but it is not time to hoist the bunting.

As national media explains, income from IRS and IRC (personal and company taxes) has fallen, and IVA (VAT) is not bringing in anything like the amount Socialist leaders imagined.

Indeed, fiscal receipts rose 3.2% “when estimates were for a growth of 3.5%”, writes Correio da Manhã, and spending “decelerated”.

Whereas the government projected a 5.8% increase in spending as a result of its anti-austerity measures, the first half of the year appears to have resulted in only 0.6%.

In other words, there is still a long way to go – with the threat of economic sanctions still hanging heavily overhead.

A statement from the finance ministry has endeavoured to make the most of the results, published yesterday, saying: “The economy and the labour market have shown signs that support the favourable evolution of fiscal and contributive receipts.”

But as Expresso explains: “The government still recognises that spending has increased below the level predicted within the State Budget in two fundamental areas: the rationalisation of intermediate consumption and the policies of salaries and State employment.”