The National Statistical Institute (INE) today released the fiscal balance in national accounts for the first quarter after the country closed 2022 with a deficit of 0.4% of GDP, a better-than-expected result.
Economists polled by Lusa believe that the data available to date, namely the results of the budget execution, allow forecasting a surplus in general for the first three months of the year.
“In government reporting, the budget balance for the 1st quarter was 4,899 million euros (2.0% of GDP), a very favorable figure that should be higher than the figure in national accounts,” says Forum Research Director for Competitiveness, Pedro Braz Teixeira.
The result, according to João Borges de Assunção, coordinator of the Catholic-Lisbon Forecasting Laboratory, is affected by inflation, “because the increase in revenues, especially those related to VAT, is greater than the increase in wages and pensions, which are the main expenses of the state.”
While Pedro Braz Teixeira believes that the result achieved in the first quarter “means little for the rest of the year” because “there is a strong seasonality in public accounts, some of which is arbitrary, since many funds are initially carried away by the Ministry of Finance, will be released only depending on the execution of the budget during the year” and “because GDP has had an exceptional and unrepeatable growth”, João Borges de Assuncão is more optimistic.
“The budget deficit for the year as a whole may remain within the forecast in the State Budget (0.4% of nominal GDP), despite the extraordinary increase in pensions that was not taken into account in the original document,” he believes, recalling that for example, Banco de Portugal predicts a deficit of 0.1%.
Although more pessimistic, Pedro Braz Teixeira nonetheless believes that even then “it is now easier to achieve the 2023 budget target”, but defends that “it is unacceptable that this be achieved through public investment, especially for public investment in health account.
For all of 2022, the budget deficit fell to 0.4% of GDP, which the government also expects to achieve this year.
Breaking down national accounts by institutional sector, INE also publishes household savings rates.
Author: Portuguese
Source: CM Jornal
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