Portugal’s deficit is reflecting the drop in tax revenues and the increase in social benefits.
Portugal‘s Prime Minister Pedro Passos Coelho chose to play down recent National Statistics Institute (INE) data that showed an increase of the national deficit in the first-quarter of 2012 compared to the same period last year.
“Budgetary risks that had been identified were already evident in the first quarter”, Passos Coelho said today on the second day of the European Council in Brussels, financial newspaper Jornal de Negócios writes.
Achieving the 4.5% deficit target agreed under the troika’s bailout agreement is getting increasingly difficult as Portugal’s deficit rose in the first quarter of 2012 compared to the same period last year, the INE report revealed.
Passos Coelho linked the slippage to the country’s implementation of the budgetary consolidation programme.
“The results observed are positive in so far as they indicate that we are making a successful adjustment”, he said, according to news agency Lusa.
The prime minister stressed his government would remain committed with the deficit targets, Jornal de Negócios writes.
Deficit: budget increasingly harder to control
During the 12 months ending on 31 March, the budget deficit was equivalent to 4.3% of GDP compared to 4.2% during the same period a year ago.
Comparing deficits over 12 months prior to the end of a quarter eliminates seasonal fluctuations in revenue and spending.
However the country showed a €3.2bn deficit in the first quarter of 2012, corresponding to 7.9%, from 7.5% a year ago as the state paid higher interest rates and injected money into several state-owned entities.
The crisis has taken a toll on families and businesses – unemployment has soared, tax revenues have dropped and state spending on social benefits has increased.
The figures released by the INE clash with the need to comply with EU-ECB-IMF troika demands and achieve the 4.5% deficit in 2012 that was agreed upon in exchange of the €78bn financial rescue package.
INE said that the deficit of Public Administration was of -€3.217bn in the first quarter compared to -€3.097bn in the same period in 2011.
(Photograph: Thierry Roge/EPA/Lusa)