Portugal Government Budget

Portugal recorded a Government Budget deficit equal to 4.90 percent of the country's Gross Domestic Product in 2013. Government Budget in Portugal is reported by the Eurostat. Government Budget in Portugal averaged -4.63 Percent of GDP from 1995 until 2013, reaching an all time high of -2.80 Percent of GDP in 1999 and a record low of -10.20 Percent of GDP in 2009. Government Budget is an itemized accounting of the payments received by government (taxes and other fees) and the payments made by government (purchases and transfer payments). A budget deficit occurs when an government spends more money than it takes in. The opposite of a budget deficit is a budget surplus. This page provides - Portugal Government Budget - actual values, historical data, forecast, chart, statistics, economic calendar and news. 2014-04-24

Actual Previous Highest Lowest Forecast Dates Unit Frequency
-4.90 -6.40 -2.80 -10.20 -5.80 | 2013/12 1995 - 2013 Percent of GDP Yearly

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Portugal Government Budget
LIST BY COUNTRY

Government Last Previous Highest Lowest Forecast Unit
Government Budget Value -622.00 2014-02-28 -219.00 271.00 -14745.00 -2123.75 2014-02-28 EUR Million [+]
Government Spending 7817.10 2013-11-15 7726.90 9004.70 5945.40 7747.54 2014-03-31 EUR Million [+]
Government Debt To GDP 129.00 2013-12-31 124.10 129.00 48.50 133.71 2014-06-30 Percent [+]
Credit Rating 39.89 [+]
Government Budget -4.90 2013-12-31 -6.40 -2.80 -10.20 -5.80 2013-12-31 Percent of GDP [+]
[+]


Further Budget Deficit Reduction Can be Achieved in Portugal

Since reaching an agreement on the bailout plan in May of 2011, Portugal has embraced a series of austerity measures and structural reforms aimed at bringing public finances into a sustainability path. So far, the overall budget deficit was reduced almost by half, reaching 6.4 percent of GDP at the end of 2012. Yet, Portugal has to cut an additional €5.3 billion in public spending over the next three years. This can be achieved by implementing necessary reforms like reduction of public wages, pensions and local governments cost.

One of biggest fixed costs in the public sector are salaries

At the end of 2012 there were 583.669 public workers costing around 16 billion euros, more than 20 percent of the public administration expenses. It is evident that for the country of 10.6 million people of which only 4.7 million actually work, the public sector employment is way too big. In order to reduce the burden it is necessary for all branches of government (central, regional and local) to make an assessment of the human resources needs in terms of qualifications, technical skills and experience. For example, at the end of 2011, Portugal had almost 33 thousand primary school, 124 thousand secondary and 37 thousand university teachers. The ratio of students per teacher was 10.9 for primary education, 13.8 for secondary and 15.5 for tertiary; while the same ratios for the OECD average were 15.8, 7.5 and 14.4 respectively. In this case, it would make more sense to increase the number of primary teachers and dismiss both secondary and university teachers. According to our estimate, this measure would reduce the total cost by 13 percent and move more resources to the much needed areas.

Pension system is running out of control

In the last thirty years, the cost of pensions almost doubled from 3 percent of GDP in 1990 to 5.6 percent in 2011. Two main factors behind this increase are the decline in the birth rate and the aging of the population. In fact, some measures like penalties for early retirement and bonuses for late retirement and the equalization of benefits between men and women and between public and private workers were already introduced. Yet, deeper reforms are needed including further increase in the retirement age. More importantly, current pay-as-you-go social security scheme should be transformed to a fully funded one. 

Local governments cost too much

The public budget for 2013 allocates 2.12 billion Euro to the local governments. This 1.15 percent of overall expenses could be reduced. In fact, the government already approved legislation to close more than one thousand civil districts. However, as 37 percent of municipalities have less than 10 thousand habitants; more consolidations could be easily implemented. This would reduce the number of salaries paid to city mayors and councilors and help to better allocate existing resources for example for maintenance and waste management.



Duarte Ricardo | duarte.ricardo@tradingeconomics.com
5/17/2013 6:10:48 PM


Government Budget | Notes
A government budget is a legal document that forecasts the government expenditures and revenues for a specific period of time. The period covered by a budget is usually a year, known as a financial or fiscal year, which may or may not correspond with the calendar year. A government budget is often passed by the legislature, and approved by the chief executive or president.


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