Public Administrations (PA) recorded a budget surplus of 1,301 million euros until February, which represents an improvement of 1,032 million euros compared to 2018, according to the Ministry of Finance. To explain this scenario is a revenue growth of 10.7%, while spending increased by 2.7%.
Data on budget execution through February are released a day after the National Statistical Office announced that last year's deficit was set at 0.5 percent of gross domestic product (GDP). For this year, the Government is working with a target of 0.2%.
However, Finance highlights that the implementation of the first two months of the year is influenced by effects that affect comparability with 2018, although they have no impact from the national accounts point of view, of which the following should be highlighted: the extension to January 2019 of the payment term in financial treasuries, with a positive impact on revenue – which amounted to € 291 million, as well as the payment in 2018 of interest from swaps, which implies a year-on-year reduction of EUR 306 million.
The revenue growth until February is highlighted by the ministry led by Mario Centeno, in anticipation of the data that will be released Wednesday afternoon by the General Directorate of the Budget (DGO). According to the Finance statement, tax revenue grew 13.7%, to the performance the economy and the extension of the payment term of taxes, such as ISP and the Tobacco Tax.
"Despite the reduction of taxes, the effect of the IRS reform and the downward revision of various VAT rates, VAT revenue increased by 17.6%, the IRS 7.0% and the IRC 33.1% , explains. Income from social security contributions increased by 8.3% and remained "the strong growth trajectory of previous years", which was 6.3% in 2017 and 7.6% in 2018, as a result of the significant increase of employment.
"The evolution of income from these taxes and social contributions occurs despite the reductions in tax rates introduced by the IRS reform, which lowered the tax for most taxpayers, and the rates on other taxes and contributions have not changed. The dynamism of the economy and the labor market, which has maintained an acceleration throughout 2018, gives indications of continuing in the first months of 2019, "he explains.
According to the Finances, primary spending grew 5.2%, due to the strong increase in the National Health System's expenses, in part related to the regularization of debts of previous years.
Salary expenses increased by 4.8%, reflecting the unfreezing of careers. The main highlights of Finance are growth in spending on teachers (4.7%) and health professionals (5.3%). It also emphasizes that the evolution of expenditure is also explained by the increase in social benefits (5.2%), with a notable increase in expenditure on sick pay (17.6%) and social provision for inclusion (36 %).
On the other hand, Social Security pension expenditure increased by 4.7% and CGA pensions grew by 1.2%, on a like-for-like basis, "reflecting the fact that the vast majority of pensioners have increases above inflation and increase pensions in 2019 took place early in the year. "
(Updated at 5:22 p.m.)