LISBON: Portugal’s public sector deficit shrank 45 percent to 358 million Euros ($389 million) in the first quarter from a year earlier, as revenues rose while spending was stable, the finance ministry said on Wednesday.
Discounting debt payments, the country had a primary surplus of 1.5 billion Euros in the period, 23 percent higher than a year ago, the ministry said. It singled out a steep 7 percent rise in gross revenues from value-added tax, which it said reflected accelerating economic growth.
Portugal hopes to cut the budget gap to 1.5 percent of gross domestic product this year from 2 percent in 2016, which was the lowest deficit in decades.
“This year the deficit is again on a good path … and we are meeting all the commitments that we have assumed,” Prime Minister Antonio Costa told parliament, adding that the reduction was achieved despite wage and pension increases in the public sector and a reduction of the income tax burden.
The government expects the economy to grow 1.8 percent this year after 1.4 percent in 2016, in what would be the country’s fourth straight year of growth after the worst recession in decades.
