AD takes power with €3.19 billion in hand
Portugal recorded a historic budget surplus of 1.2% last year, which exceeds the Ministry of Finance’s official forecast of 0.8%, according to figures released today by the National Statistics Institute (INE).
This is the largest surplus “in (the country’s) democracy”, writes Lusa – and means that the new centre right government will be taking power with €3.19 billion in the kitty (see below).
The result reflects an improvement in public accounts compared to the deficit of 0.3% of Gross Domestic Product (GDP) recorded in 2022.
The surplus surpasses that of 2019 (0.1%) – the year in which former Finance Minister Mário Centeno entered the country’s economic history as the first government official in Terreiro do Paço to achieve a positive budget balance since 1974.
“Between 2022 and 2023, total general government revenue increased by 9.0% (9.5 billion euros more), largely driven by the increase in current revenue (8.1%, 8.5 billion euros more),” says INE. (Revenue having been powered by inflation)
In the same period, total public administration expenditure rose by 5.2% (up €5.6 billion).
Central Bank governor warns incoming government it ‘mustn’t spend too much’…
One of the advantages of the centre-right AD alliance having won the March 10 elections is that fact that ‘this time’ a right wing government is coming into power when there is money in the kitty.
According to Expresso’s calculations this morning, the 1.2% ‘surplus’ translates into €3.19 billion.
But, almost as if to rain on the ‘good news’ for a new government intent on improving the lot of the the country’s beleaguered population, central bank governor Mário Centeno was at pains on Friday to warn that it should spend wisely: a budgetary surplus “is a way of ensuring fewer difficulties in the event of a change in the economic cycle, he said.
“Portugal spent 80% of its days, between 2000 and 2017, in an excessive deficit procedure. We don’t want to go back there (…) If we don’t protect the financial margin that will allow us to manage the next crises, the country will run the same risks it ran in the past,” he said, stressing that the rules of the Stability and Growth Pact (SGP) will return in 2025 after four years suspended due to the pandemic.
Critics saw Mr Centeno’s warning as ‘de trop’: suggesting if a Socialist government was returning to power, he would never have given it. And considering that Mr Centeno himself was tipped to be the new PM (had António Costa’s plans met with President’s Marcelo’s approval) the whole episode smacked a little of Socialist ‘sour grapes’.
The air is already redolent with sour grapes: Socialist leader Pedro Nuno Santos is ‘demanding’ to be told how AD means to govern, considering its lack of majority, and PCP communists are busily trashing any possible centre-right plan for the country, before it has even been announced.
As Expresso admits: “there is speculation that the minority AD government led by Luís Montenegro will use (the surplus) to fulfill some, or all, of the electoral promises it made to various State professional groups demanding pay rises and the accounting of years lost in their careers.
“The “excessive” surplus is, however, causing discomfort among the ranks of the PS, now in opposition, who are annoyed by the cash that could have been used in power to meet salary demands. And which will now be a gift to the new government”.
natasha.donn@portugalresident.com
