Government’s budget surplus figures don’t add up says public finances watchdog

Portugal’s public spending watchdog, the Council for Public Finances (CFP) has warned that calculations for the country’s budget surplus don’t add up and has called on the government to show more transparency.

The entity run by Nazaré da Costa Cabral (pictured) has pointed to several “weaknesses” on its analysis of the Outline State Budget, “particularly on the expenses side”.

The CFP says that the 0.1% surplus foreseen by the government for 2026 is based on extraordinary revenues and in assumptions that in some cases reflect unsubstantiated changes to expenditure.

In other words, the government’s forecast “is not consistent with the growth dynamics of some of its components”, which is reminiscent of “practices that in the past limited the transparency and credibility of fiscal policy”.

In one example, for intermediate consumption, the Minister of Finance “presents a reduced growth forecast” of 1.15%, with the weight on Gross Domestic Product (GDP) falling by 0.2 percentage points “without policy measures or other effects to sustain it”.

A drop that “seems to come from the sharp decrease in the acquisition of goods and services (of 10.1%) in the health programme in public accounting” (that is, the accounts from a cash logic), but “ignoring the projections incorporated in this item in national accounts” (in which expenses are recorded from a commitment perspective).

The problem is that in the budget proposal “no explanation has been given for the reduction in the acquisition in the goods and services in the government’s health programme, which in turn explains the low nominal growth (1.5%) of effective consolidated expenditure from this important budget programme.

Source: Jornal Económico