Minister of Finance Vítor Gaspar warned that budgetary execution for this year is proving riskier than previously forecast, suggesting the 4.5% deficit target outlined for 2012 could be at risk.
Budgetary data indicate that “risks” and “uncertainty” are increasing, as tax and social security revenues drop with the worsening of the crisis in the country, said Portugal’s Minister of Finance Vítor Gaspar Thursday, 21 June, after a Eurogroup meeting in Luxembourg.
After meeting with the finance ministers of the countries that share the common currency, Gaspar said, quoted by news agency Lusa, that “data available about the behaviour of revenues is not positive… since it was found that fiscal revenues and social security contributions resulted below what was expected”.
This bodes negatively for the country, currently on a tight rope to comply with a 4.5% deficit for 2012 under the terms of the bailout agreement signed last year with the EU-ECB-IMF international lenders.
Portugal’s National Statistics Institute (INE) reported last May a 2.2% drop in the GDP for the first quarter of 2012 from the same period a year ago, as the government’s austerity measures seem to be plunging the country into a deep recession.
As hundreds of businesses close and unemployment rises, tax and social security contributions have been falling in tandem as social benefits paid by the state rise.
Gaspar stressed the risks which the data, to be released today, represent for the country:
“The data represent a significant increase of risks and uncertainties associated with budgetary forecasts”, he said, quoted by Lusa, adding that the country is still committed to bringing the deficit down to the targets defined by the troika without further financial assistance:
“The government is decided to comply with the 4.5% deficit for 2012… without more time nor more money”, Gaspar said recalling that, in case external issues force Portugal to remain out of the international money markets, the Eurogroup will be available to support the country after the term of the programme, in September 2013, in undefined terms.
No additional austerity measures are currently on the table, Gaspar added, according to newspaper Público.
(Photograph: Nicolas Bouvy/EPA/Lusa)