INE releases 2023 budget surplus today

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The National Statistics Institute (INE) today announced the largest budget surplus recorded in democratic Portugal, which will surpass the achievement of former Finance Minister Mário Centeno when in 2019 it reached the first positive balance since 1974.

Economists consulted by Lusa predict a surplus of between 1% and 1.5% of Gross Domestic Product (GDP) in national accounts (the one that counts in international comparisons), up from the 0.8% projected by the Ministry of Finance in October.

Last year’s budget execution gives strong signs that the result could be higher than expected, since the State (on a cash basis) recorded a surplus of 4,330 million euros in 2023, a figure that contrasts with the deficit of 3,437 million euros in 2022, and this has been the expectation within the resigning government.

Among the main national and international economic institutions, the Bank of Portugal predicts a surplus of 1.1%, the Public Finance Council 1%, the European Commission 0.8%, while the International Monetary Fund points to 0.2%.

If the forecasts come true, the 2023 surplus will surpass the 0.1% recorded in 2019, the year in which former Finance Minister Mário Centeno entered economic history as the first government official in Terreiro do Paço to achieve a positive budget balance in the democratic period.

Finance Minister Fernando Medina (PS), whose successor will be known this week with the announcement of the composition of the PSD government that will take office, thus leaves a better than expected starting point for this year.

However, the coordinator of the NECEP – Católica-Lisbon Forecasting Lab, João Borges de Assunção, warns that the State Budget for 2024 (OE2023) “included quite large increases in permanent expenses” and “there could be a more unfavorable evolution for public accounts in 2024”, with the ongoing disinflation process “increasing nominal expenses faster than tax revenues”.

“There is also the added uncertainty about possible changes to budgetary policy with the change of government and also some adverse one-off effects on spending in the first few months of the year as a result of the electoral environment,” he says.

The director of the Forum for Competitiveness’s research office, Pedro Braz Teixeira, also believes that this is “a more apparent than real advantage for 2024”, since “budgetary consolidation in recent years has been very poor, with expenditure being compressed rather than reduced through reforms”.

The economist points in particular to the wage demands in the civil service, the excess tax revenue that has “led to demands for lower taxes, which will weigh on SB24” and the under-implementation of public investment, with a “strong impact on the degradation of public services” that will need to be compensated for.

The national statistics agency is today publishing the first notification of the Excessive Deficit Procedure, which is delivered by member states to Brussels, and in which the forecast for the current year is the responsibility of the Ministry of Finance.

The data that INE will release today will also provide information on indicators such as the household savings rate.

Hervé Hubert
Hervé Hubert
Hervé Hubert is a 55-year-old writer and journalist based in Porto, Portugal. Born in France, he brings a unique blend of French and Portuguese perspectives to his work. Education Hervé studied Journalism and Literature at the University of Lyon in France. After completing his studies, he gained valuable experience working with various French media outlets (Portugal France also). Career He worked for several years as a journalist in France before making the move to Portugal. In Porto, he joined the Portugal Pulse team as a staff writer. Skills Hervé specializes in storytelling, investigative journalism, and cultural commentary. He has a flair for capturing complex issues in a relatable way. Personal Life He currently resides in Porto and enjoys the city's rich culture, from Fado music to Francesinha cuisine. Hervé continues to maintain strong ties to his French heritage, often traveling back to France for family visits and cultural exploration. With his unique background and diverse skill set, Hervé Hubert adds a layered, multicultural lens to every story he covers.

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