EUR 3.8 billion Budget Impact for Portugal From Pandemic

 

Furloughs, health expenses and other measures to support Portugal´s economy and respond to the covid-19 pandemic penalised worsened the budget balance by EUR 3.8 billion, according to government data.

A Technical Unit for Budgetary Support (UTAO) quick note on the General Government budget balance in 2020, released on Monday states that “without the direct budgetary effect of the Covid-19 measures in national accounts, the 2020 budget balance would have amounted to -3.8% of GDP [Gross Domestic Product],” says .

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According to the experts who support Parliament’s Budget and Finance Committee (COF), in national accounts, the impact of the pandemic response measures corresponds, for the most part, to measures that worsen General Government expenditure.

“Among these – they state – the most relevant measures were furloughs (EUR 437 million) and health expenses related to individual protection equipment and medicines (EUR 332 million).

These measures also led to a loss of revenue, with UTAO highlighting the loss arising from the exemption from payment of the single social tax (EUR 470 million).

In 2020, the general government balance on national accounts amounted to EUR 11.5 billion, translating into a deficit of 5.7% of GDP, a result that, according to UTAO, “exceeded the estimate for the year as a whole presented by the ministry of finance”.

Comment: Portugal Allows ‘Golden Visas’ in Major Cities for Another Year

Portugal on Monday entered the second phase of easing its covid-19 lockdown, imposed in January, but strict rules have been gradually relaxed since March 15, when hair salons, bookshops and schools for younger pupils reopened.

On Monday, cafe and restaurant terraces, museums, non-food markets and fairs, small shops, middle schools and gyms were allowed to open their doors.

 

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