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Public administrations recorded a budget deficit of 789 M€ in the first half of the year (0.8% of GDP generated in that period). This result reflects the recapitalization of Novo Banco that penalized public expenditure at 1149 M€ (equivalent to 1.1% of GDP of the semester) in the second quarter. Excluding the effect of this temporary and non-recurring measure, a budget surplus of 0.3% of GDP would have been recorded, a result close to the latest annual estimate for the adjusted budget balance of those measures (0.5% of GDP) presented in the Draft Budget Plan Project 2020 (DBP/2020).


Compared to the same period of 2018, there is a 1.4 p.p. of GDP (of 1366 M€) improvement in the balance determined mainly by the contributions of the central administration subsectors and local government. Excluding interest expenditure, the primary balance reached 2404 M€ in the first half of the year (2.3% of GDP), a year-on-year increase of 1.2 p.p. of GDP.

Between January and June of this year, the growth in public revenue (5.5%) was higher than that of the annual estimate of the Ministry of Finance (4.1%).


Public spending increased by 1.9% in the first half of the year, with a slowdown in its growth rate in the second quarter of 2019, falling below the MF estimate for the year as a whole (3.2%).


Public debt as a percentage of GDP decreased to 121.2% in the year ended in the second quarter of 2019, resuming the downward trajectory begun in the second quarter of 2018. This result, which reflects a 2.5 p.p. reduction in GDP compared to the year ended the previous quarter, keeps the debt ratio above the MF's latest estimate for 2019 (of 119.3% of GDP). Compliance with this estimate implies that in the second half of this year there will be a reduction of that ratio by 1.9 p.p. of GDP.


These results incorporate the new statistical basis for national accounts. Revisions resulting from the change in the statistical basis in the period 1995-2018 and which integrate, among others, the clarification of the transactions recording resulting from the Deficit and Debt Manual update, involved changes not only to the budget balance and debt but also to the level of the tax burden, public consumption and social benefits.


For 2019, fiscal developments for the first half of the year and available information, although incomplete, for the third quarter allow us to see compliance with or surpassing of the annual estimate for the budget balance presented by MF(of -0.1 % of GDP).

Date of last update: 31/10/2019

Budget Outturn . Report nº 11/2019 . 31 October 2019