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ACCEPT

With this Report, the Portuguese Public Finance Council intends – within its legal mandate framework – to strengthen its sectoral, annual or biannual analyses, which has been making of areas such as Local Government, Social Security and now, for the first time, the National Health Service (NHS).

 

The growth in expenditure of the National Health Service (NHS) increased from 0.5% in 2013 to 4.8% in 2019, increasing its share  in total public spending from 10.4% in 2013 to 11.8% in 2019.

NHS expenditure as a percentage of gross domestic product (GDP), after falling between 2014 and 2017, returned to growth since 2018 to 5.03% of GDP in 2019.

 

Between 2013 and 2019, the target set in the initial budget for the NHS budget balance was never achieved, and the actual budget balance was substantially worse than the budgeted balance, with unfavourable deviations ranging from 42M€ (2017) to 531M€ (2019). These negative deviations resulted from an under-budgeting of expenditure, which was on average 6% higher than the ones budgeted in the period under review.

 

From 2013 to 2019, the NHS cumulative budget outturn showed a negative balance of 2,796M€, 48% of which resulting from  2018 and 2019 years, where the budget balance was negative at €733M and €621M respectively.

 

Despite revenue growth, essentially justified by increased State Budget (SB) transfers to the NHS, the pace of expenditure growth poses financial sustainability challenges that need to be considered in the framework of fiscal policy and health policies.

 

Current expenditure represents, since 2017, 99% of total expenditure (10,681M€ in 2019). Between 2013 and 2019, capital expenditure never exceeded 2% of total expenditure, which translates into a reduced expression of investment. Among the current expenditure in 2019, wage expenditure represents 42%, external supplies and services 39.3% and inventory purchases 18.3%.

 

The immediate financial effect of NHS deficits, which represent a persistent economic imbalance, is the increase in debt to external suppliers, which at the end of 2019 amounted 1,589€. In fact, 39 entities (more than 2/3 of the total) have an average payment period of more than 60 days.

General Government Sectors . Report nº 10/2020 . 21 July 2020