The impact of the taxpayer bailout of State-owned bank, Caixa Geral de Depósitos, (CGD), has been revealed.
Without the recapitalisation of the ailing bank, last year’s deficit would have been an enviable 0.9% of Gross Domestic Product.
As it is, according to Eurostat which has used the final figures released by the Institute of Statistics, the overall 2017 deficit was 3% as the CGD bank bailout cost the nation's taxpayers over 2% of GDP.
According to the first 2018 notification on the Excessive Deficit Procedure, issued by the Statistics Institute to Eurostat, the general government deficit amounted to €5.709 billion, which was 3% of GDP, even higher than the 2% registered in 2016 despite Portugal alleged 'economic resurgence.'
"This result includes the impact of the Caixa Geral de Depósitos recapitalisation," a whopping €3.944 billion, "which led to a worsening of the general government financing requirement of 2% of GDP," states the Statistics Institute.
Whichever way you look at the multitude of often baffling figures, Portugal’s taxpayers have been bled almost dry by the government and Europe’s decisions that banks must be bailed out at all costs. This includes Novo Banco which, despite the latter having been sold to Lone Star, continues to cost the public dearly as Novo Banco is able to dump toxic loans and force taxpayers to pick up the bill.
The government’s tax take increased by 3.9% billion in 2017, necessary funds when large bailouts are imposed, with income tax up by 3.3%, social security contributions up over 5% and VAT income rising by over 6%.
As for the Caixa Geral bailout, Finance Minister, Mário Centeno, said today that the decision by Eurostat to include the impact "was wrong."
The hitherto 'golden boy' of Europen finance, wants Portugal's 2017 public accounts deficit stated at the lower figure of 0.9% of GDP and not 3%, stressing the decision from Europe to include the Caixa Geral cost, “runs counter to the European Treaties," since the recapitalisation "was made outside the scope of State aid."
Whatever the final decision on the 2107 accounts, Mario Centeno said, "it will have no impact whatsoever on the evaluation of public accounts in Portugal," which rather missed the point as international credit rating agencies and lenders look at headline figures and Portugal’s headline figure is a deficit of 3% - whatever the excuses.