The International Monetary Fund predicts an even more gloomy deficit figure for Portugal than Brussels, a painfully high 3.4% of GDP by the end of 2015.
Brussels is going for a 3% deficit for Portugal next year and rejects the government's prediction of an over-optimistic 2.7%.
The Brussels figure discredits the Government's forecasts for 2015 and today the IMF followed with a comment that the deficit will be "markedly superior" to the figure from Passos Coelho’s team as contained in the 2015 State Budget.
This prediction is the result of the first evaluation by the IMF of the Portuguese economy since the end of the financial assistance programme.
At the heart of the variance are "more conservative assumptions on macroeconomic projections and revenue."
Brussels and the IMF expect a more modest economic growth rate and do not believe that Portugal’s Tax Authority will be able rake in the high figure in taxes that it needs to make the books balance.
Both agree that public debt should begin to recede in the second half of 2015, but predict that the eventual figure still will be above Portugal’s own forecast.
The IMF states that Portugal’s borrowing will represent 125.7% of GDP, a figure that surpasses that of the European Commission which is going for 125.1%, both higher than Passos Coelho’s voter-friendly figure of 123.7% of GDP.
Among the concerns expressed by the IMF are constraints to export growth and the competitiveness of businesses, and the excessive debt being carried by Portugal’s companies.
The IMF regrets also that the process of ‘fiscal consolidation’ is predicted to tread water next year as it wants the adoption of such budgetary adjustments that are necessary to reduce the public debt to 'sustainable levels.'
Portugal’s own Public Finance Board says there are risks in achieving the government's budgetary target for next year and that a full 40% of the fiscal consolidation measures are ‘not well specified’ in the 2015 State Budget.
The Board adds that overly optimistic economic forecasts, projections of revenues that are highly dependent on consumption and the absence of estimates of the gains from the fight against tax evasion all create weaknesses and risks in the proposed State Budget as submitted by the Government.
It seems then that the 2015 State Budget is indeed one that has been tainted by the prospect of an election for which Passos Coelho needs to persuade the country that all is well under his command.
