The National Institute of Statistics today announced that the budget deficit last year was 7.2% of gross domestic product (GDP) and not 4.5% as previously had been reported.
This huge increase, a body blow to the Passos Coelho executive less than two weeks before the general election, is due to the inclusion in the 2014 accounts of the €4.9 billion used to sort out the BES mess in creating the ill-fated Novo Banco.
The 2014 budget deficit is close to the level of the dark days of 2011 and the figures this year to June at 4.7% of GCP is far higher than expected by the government for the whole year and is unlikely to improve before the year-end for which the government assured the public that the target of 2.7% will be met.
The Left Bloc voiced the views of many parties that the 2014 deficit is the final proof of the "failure of government" representing Passos Coelho’s "biggest failure."
In the second notification of the Excessive Deficit Procedure (EDP) sent today to Brussels by the Institute, the Government reiterated its commitment to reduce the budget deficit to 2.7% of GDP.
The general secretary of the socialist party, António Costa, said today that the deficit figures make it "clear" that the austerity programme has been a fantasy perpetuated by the coalition.
The Left Bloc’s Mariana Mortágua considered that the budget performance in 2014 and so far in 2015 can be seen as "comprehensive evidence of the government's failure."
The Greens joined in the blood bath with the Communists’ Jerónimo de Sousa stressing that the budget deficit in 2014 is similar to that of 2011, so after three years of robbing the people the coalition can expect its policies to be reflected in a comprehensive drubbing at the polls.
The Prime Minister Pedro Passos Coelho, never short of an earnest argument, said that the 2015 figures reinforce the belief that the government had reduced the deficit to below 3%, if it had not been for the Novo Banco figure being included in the 2014 accounts.
Passos Coelho referred to the impact of Novo Banco’s botched sale on the 2014 deficit, saying that is it just a matter of accounting and stressing that the state is receiving interest on the money which it lent to the Resolution Fund to set up Novo Banco.
The problem for the government is that by failing to see Novo Banco sold, the governor of the Bank of Portugal has made the biggest political mistakes of this coalition. However the figures are explained away, these are the ones used by Brussels, the country’s lenders, international ratings agencies and other lenders to asses Portugal’s performance.
A 2014 deficit of 7.4%, however the figure is dressed up, is the official one and represents failure on a grand scale.
