LISBON : Portugal’s budget gap rose last year to hit the EU threshold for excessive deficits of 3 percent of GDP due to a massive capital injection in state-owned bank CGD, but halved when that one-off impact is discounted and should remain around 1 percent in 2018.
Finance Minister Mario Centeno, who also chairs the Eurogroup of euro zone counterparts, said on Monday the recapitalization of Portugal’s largest bank by assets would have no impact on the evaluation of public accounts “because in 2017 Portugal had met all its targets.”
In 2016, the overall budget deficit was 2 percent – already the lowest in over four decades of Portugal’s democratic history. Economic growth had since accelerated, stoked by growing investment and exports, to reach its strongest pace since the turn of the century, at 2.7 percent last year.
Last year, once bailed-out Portugal delivered the biggest cut in the debt-to-GDP ratio in 19 years, from almost 130 percent in 2016.
