LISBON: Portugal’s budget deficit was just 0.1 per cent of gross domestic product in the 12 months ending in September, putting the country on course to beat its full-year target and reduce its debt burden.
The third quarter year on year figure compared with 1.3 per cent three months earlier and indicated a July-September surplus of 2.6 per cent. The National Statistics Institute said on Friday that in the first nine months of the year the deficit fell to 0.3 per cent of GDP from 2.8 per cent in the same period of 2016.
Portugal exited an international bailout programme in 2014 with many European officials holding the country up as a success story in reforming its economy.
The official full-year deficit target is 1.4 per cent which would make it a new record low in over four decades of the country’s democratic history, but Prime Minister Antonio Costa said on Thursday the budget gap should narrow even more from last year’s 2 per cent and end the year below 1.3 per cent.The European Union demands deficits at or below 3 per cent. Finance Minister Mario told reporters the deficit reduction “shows that the sustainability of public accounts is now a reality” in Portugal and will allow for the biggest cut in the debt-to-GDP ratio in 19 years to around 126 per cent in 2017 from last year’s around 130 per cent. This is still a huge debt; the EU wants it at or heading down towards 60 per cent. The latest deficit estimate does not include any impact from the recapitalisation of state-owned bank Caixa Geral de Depositos by the state, worth around 4 billion euros, or 2.1 per cent of GDP.
