The Budget Support Technical Unit (UTAO) believes that the data for the first quarter indicate that the deficit target set by the Government (-1.9%) can be met, although it warns of the high uncertainty generated by the current situation.
In the follow-up report on budget execution in national accounts, from January to March, released this Monday, the technicians who support the deputies point out that “the known data for 2022 in national accounts, although referring only to the first quarter, give positive indications about the probability of exceeding the planned budget target“.
The unit coordinated by Rui Nuno Baleiras highlights that the deficit stood at 0.4% of the Gross Domestic Product (GDP) in the first quarter, in national accounts, an improvement of 5.5 pp compared to the same period of the year past.
For the remaining quarters of 2022, it is foreseeable that tax revenues may continue to benefit from the context derived from inflationary pressures, which increased after the start of the armed conflict in Ukraine, since the burden of the Covid-19 measures is also expected to they are lower than those registered in 2021″, can be read in the report.
UTAO stresses, however, that the analysis “is covered in some uncertainty in terms of economic development“, noting that “it may force the Government to take additional fiscal policy measures (“inflation and Ukraine” package) that will bring charges above” those provided for in the State Budget for 2022 (OE2022).
In the report, the technicians also highlight that the set of measures to respond to the Covid-19 pandemic, the inflation package and the implementation of the Recovery and Resilience Plan (PRR) worsened the budget balance by 864 million euros in the first quarter, which represents 1.6% of nominal GDP.
UTAO notes that the budget impact of the Covid-19 policy measures until the end of the first quarter had a direct impact on the budget balance of 804 million euroswhich represents 1.5% of nominal GDP accumulated in the quarter, having risen to 72% of the forecast in OE2022 for the year as a whole.
Spending on policy measures to mitigate the economic consequences of inflation amounted to €60 million (0.1% of GDP) at the end of the first quarter.
Source: Observadora
