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Portugal's Jan-July budget surplus quadruples on strong revenue

Published 01/09/2023, 10:54
Updated 01/09/2023, 10:55
EUR/USD
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LISBON (Reuters) - Portugal's budget surplus almost quadrupled to 2.12 billion euros ($2.3 billion) in the first seven months, fuelled by a strong increase in tax and social security revenue coming from a buoyant jobs market, the finance ministry said.

A year ago, the budget surplus for the same period was 572 million euros.

The finance ministry said in a statement late on Thursday that overall revenue rose 8.6% to around 61 billion euros, "largely due to the resilience of the labour market", while public spending rose 5.9% to 58.7 billion euros.

With an unemployment rate of 6.3% in July, Portugal is close to a situation of full employment.

Revenue from value-added tax (VAT) rose 8.1% to 12.7 billion euros on the back of high inflation, which started the year at 8.4% and was still at 3.7% in August.

Opposition parties have criticised the government for failing to redistribute additional revenue from inflation to hard-hit families.

The ministry said that extraordinary support measures for the most vulnerable families, young people and agriculture amounted to more than 1.5 billion euros in the seven months and more spending would be reflected in the budget balance in the coming months.

The government's full-year forecast is for a budget deficit of 0.4% of gross domestic product, the same as last year. It is not uncommon for year-end spending to turn surpluses into deficits.

($1 = 0.9219 euros)

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