Portugal’s government spending to the end of November exceeded revenue by €2 billion, nearly half the deficit at the same point last year, leading the Treasury to declare the all-important year-end deficit will be 1.4% of GDP, or even less.
The result guarantees a budget surplus, before interest payments, of almost €6 billion allowing the Ministry of Finance to close the year with a deficit at, or under the target of 1.4%, the ambitious figure that was put in the 2017 State Budget.
"The general government deficit up to November amounted to €2,084 million, reflecting an improvement of €2.326 million compared to 2016," writes the Finance Ministry, concluding that "the evolution of the deficit during the year guarantees, for the second consecutive year, the fulfilment of the budgetary objectives established in the State Budget."
Total revenue increased by 4.3% and spending has advanced less, up about 0.8%, according to the statement.
The reduction of the budget deficit largely is explained by higher tax revenues, up 4.3% year-on-year, which are growing well above expenditure.
Gross VAT revenue (before refunds) maintained a significant growth of 7.6% (5.6% net) along with corporation tax revenue up 19.7% and income tax is up 4%, reflecting an increase in the jobs.
In the note sent to the press, the ministry reports a reduction in total amount of debt owed to suppliers and an increase in late payments, which should be reversed in December.
These figures should enable the Finance Minister to finish the year in fine form, defying his detractors and ensuring Portugal international deficit commitments are all in order.
