IMF more pessimistic than Government worsens deficit forecast to 0.6% in 2019 – The Economic Journal

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The International Monetary Fund has worsened the estimate of the Portuguese deficit to 0.6% of GDP this year, worse than the 0.2% forecast by the Government, but now anticipates that the first surplus will register a year earlier in 2021.

The International Monetary Fund (IMF) has worsened the forecast for the Portuguese deficit this year to 0.6% of the Gross Domestic Product (GDP), according to the Fiscal Monitor, a report on the world budget forecasts, a deterioration by 0.2 percentage points (pp) from the November estimate of 0.4% of GDP under the seventh post-program evaluation, and also above the government's 0.2% estimate for the deficit this year.

In the October 'Fiscal Monitor', the IMF predicted a deficit of 0.3% of GDP in 2019, an estimate that then worsened in November to 0.4%.

By 2020, the Fund now anticipates a budget deficit of 0.1% of GDP (against 0.2% in October).

The IMF, which is based on an invariable policy scenario for the coming years, believes that the first surplus of 0.4 percent of GDP will occur in 2021, a year earlier than in October, when surplus of 0.2% of GDP, only in 2022.

By 2022, the IMF has now anticipated that the surplus will fall by 0.1 pp to 0.3%, remaining at that level by 2023 and then recovering to 0.5% of GDP by 2024.

According to the latest data from the National Statistics Institute (INE), the deficit was 0.5% of GDP in 2018, the best result in democracy and below the 0.6% forecast indicated in February by the Finance Minister, Mário Centeno.

In 2017, Portugal registered a deficit of 3%.

According to IMF forecasts released today, the primary balance, which excludes charges on public debt, will be set at 2.5% in 2019, down from 2.9% in October, rising to over 3% from 2020 (3.1%) to 2024.

The projections for Portugal, which are coordinated by former Finance Minister Vítor Gaspar, now director of the IMF, are based on the State Budget for 2018 and have been "adjusted to reflect the Fund's macroeconomic forecasts".

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