State coffers “could be emptier than feared” says public finance chief

State coffers in Portugal “could be emptier than feared” due to the coronavirus outbreak.

Nazaré Costa Cabral, President of the Council of Public Finances, founded the alert during an online conference debating the fiscal effects of Covid-19.

As countries elsewhere are counting the costs of the pandemic – UK has just seen its economy shrink by a fifth – Ms Costa Cabral stressed: “My concern is that there could be companies that purely and simply aren’t able to pay the taxes facing them – by that I mean taxes that have mounted up, including Social Security contributions”.

Extensions to payment limits could be one answer, but only if the crisis doesn’t continue for much longer.

If it does, she predicts businesses will end up having to declare bankruptcy, leaving a major question mark over the knock-on effects to the State treasury.

Ms Costa Cabral’s remarks were made before the government released its plan for the Supplementary Budget which has allowed for a drop in tax revenue of €5.2 billion.

But as Diário de Notícias adds, this doesn’t reduce the risks of shortfalls as there are still risks regarding ‘credit lines’ extended since March.

natasha.donn@algarveresident.com