Deficit stood at 0.5% in 2018, the lowest ever in democracy – The Economic Journal

Deficit stood at 0.5% in 2018, the lowest ever in democracy - The Economic Journal

The budget deficit was set at 0.5% of Gross Domestic Product (GDP) in 2018, slightly below the forecast by the Finance Minister in Parliament in February. The data released by the National Statistics Institute (INE) on Tuesday give the Government reason to smile, after having revised down the ratio registered in the State Budget for 2018 (OE2018) in the Stability Program in April last year, from 1.1% of GDP to 0.7%.

At a hearing in the Committee on Budget, Finance and Administrative Modernization, Mário Centeno had already admitted that the deficit should have been "around 0.6%". The confirmation slightly below came this Tuesday, with the first notification of 2019 concerning the excessive deficit procedure, which INE sent to Eurostat.

"In 2018 the need for Public Administration (PA) financing reached 912.8 million euros, which corresponds to 0.5% of GDP (3.0% in 2017)," says INE.

Last week, technical experts from the Technical Support Unit (UTAO) estimated that last year's deficit would be around 0.4% of GDP – the most optimistic forecast among national and international institutions. The Public Finance Council estimated a deficit of 0.5% for this year, according to the report "Public Finance: Situation and Condition 2019-2023".

Last year's deficit in national accounts, which it accounts for Brussels, was thus below 3% in 2017, which included the recapitalization of Caixa Geral de Depósitos. Without injecting capital into the public bank, the value would have been 0.92%.

For this year, the Finances are working with a goal of 0.2% of GDP and the Government has already refuted that the injection of 1,149 million euros in the New Bank has impact on the public accounts.

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