State records €1.81B budget surplus in H1

The Portuguese State recorded an adjusted budget surplus of €1.810 billion in the first half of 2023, an improvement of €600 million over the same period last year, the ministry of finance announced on Monday.

“Public Administrations recorded, from a public accounting perspective, an adjusted budget balance of €1.810 billion in the first half”, reads a statement released by the executive, which precedes the budget execution summary.

Compared to the first half of 2022, the figures now released show an improvement of €600 million.

The ministry headed by Fernando Medina emphasised that revenue is adjusted for the €3.018 billion transfer from the state owned Caixa Geral de Depósitos Pension Fund to Caixa Geral de Aposentações (the civil service pension fund).

The operation is “neutral” in the national accounts balance, assuming a financial nature, but “matters for the execution from the public accounting perspective”.

According to the same note, revenue advanced 7.7% in adjusted terms, with “positive dynamics” in the labour market, “which justify about two-thirds of the increase”.

In turn, expenditure increased by 6.5%, influenced by income-enhancing measures, such as the Public Administration remuneration enhancement package and measures for households, as well as by the reflection of inflation in public procurement.

There was also a reduction in expenditure associated with the pandemic in this period.

“Excluding one-off measures (Covid-19 and geopolitical shock mitigation measures), actual expenditure grows 9.1% year-on-year, while primary expenditure (excluding interest) grows 9.8% year-on-year and 20.6% compared to the same period in 2019”, the ministry detailed.

In the first half of the year, compensation of employees increased by 7.7%, compared to the same period in 2022, reflecting the salary updates of general government workers, as well as the impact of the increase in the minimum monthly guaranteed remuneration and the increase in the meal allowance.

Here the contribution of salaries in the national health service (9%) and the PSP (Public Security Police) and the National Guard (GNR) (8%) stands out.

Compensation of employees, in turn, rose by 7.7% between January and June, and investment expenditure in Social Administration and Social Security grew by 2.5%, driven by investment in the expansion of the Lisbon and Porto Metro, as well as in the Railways.

In the first half of the year, social benefits added 20% compared to the first half of 2022, excluding Covid-19 measures and pensions.

“This performance was strongly influenced by the behaviour of expenditure on family allowances for children and young people (+29.5%), social benefits for inclusion (+25.6%) and parental benefits (+11.4%),” it explained.

Pensions, on the other hand, had an increase of 5.4% in the period under review.