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The former Minister of Finance Fernando Medina rejected this Thursday that Portugal presents a budgetary problem and accused the current head of the portfolio, Miranda Sarmento, of “technical ineptitude” or alternatively, “political falsehood.”

This position was conveyed by the socialist deputy Fernando Medina after the Minister of State and Finance estimated the deficit is around 600 million euros until the end of the first quarter of this year, in a press conference in which he accused the previous Government of having increased spending after the last legislative elections.

“The budget situation is much worse than what the previous Government had announced,” declared Joaquim Miranda Sarmento at the end of the Council of Ministers, stating that the deficit of 300 million euros recorded in the last summary of budget execution in March, is important to add another 300 million euros as a result of the increase in debts with suppliers.

Before journalists, Fernando Medina rejected that Portugal presents a budgetary problem and insisted that, in a scenario of unchanged policies, the country will register a surplus of around 0.7% at the end of the year.

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“They were regrettable statements [do atual ministro de Estado e das Finanças] and worrying that reveal one of two things: either a profound lack of preparation and technical ineptitude or a political falsehood,” responded Fernando Medina, at his side the former Undersecretary of State of the Prime Minister, António Mendonça Mendes, who, during the next executive socialist, He was also Secretary of State for Tax Administration.

Fernando Medina said that on April 1 he reported “rigorously, with public and non-public data” the new Finance team, led by Miranda Sarmento, on the country’s financial situation.

“Then I conveyed that the country, with invariant policies, would have a surplus of 0.7% in 2024, an estimate that the new Minister of Finance assumed two weeks ago to be around 0.3%,” he said.

The former Minister of Finance affirmed that in public accounting the recent data from the General Directorate of Budget was presented regarding the summary of budget execution until March – cash values ​​that the State has in each quarter -, when the criterion applies to Brussels is national accounting.

“In the back, [Miranda Sarmento] uses a falsehood, tries to compare and use data in public accounting to determine that the country has a budget problem. But the country does not have any budget problem,” highlighted Fernando Medina.

At the end of the press conference, the former Minister of Finance regretted that Joaquim Miranda Sarmento had entered into “the political guerrilla” around a sensitive area such as the budget, and left a warning for him, as well as for the PSD in general. .

“If the PSD believes that it will gain something from this type of guerrilla war with me and the Finance team that preceded it, it is deeply mistaken. Especially because there is one thing that is going to happen to them: the DGO bulletins will continue to come out and, at some point, they will show high surpluses,” he warned.

Then, he addressed journalists: “I hope that at that time they will remember and ask the Minister of Finance about that deficit in the first quarter” of 2024.

When asked if he was available to give explanations in parliament about the country’s budgetary situation, Fernando Medina said yes and indicated that he would soon be in the Budget and Finance Commission to talk about the debt reduction process.

“Yeah [a comissão] If you want to listen to it in the same session, I’ll be there. “I am perfectly aware of what I did,” she stressed.

When asked if the role of his successor in the Department of Finance favors political dialogue between the PS and the PSD/CDS-PP Government, he responded: “Bad faith and lack of seriousness in politics are always a bad sign. ”.

Budget execution reflects changes in withholdings and extraordinary expenses

Fernando Medina also defended that the budget execution reflects changes in withholdings and extraordinary expenses and remembers that it does not include balances carried over between the State and Social Security.

“Values ​​in public accounting are very easy to explain. Firstly, they are the result of the true, effective and tax reduction policy that the PS Government has adopted,” said Fernando Medina, before journalists, in the Assembly of the Republic, after the Minister of State and Finance, Joaquim Miranda Sarmento, stated that “the budgetary situation is much worse” than what the previous Government had announced.

The former government official maintained that the growth of tax revenues during the first quarter of 2024 is lower compared to the same period in 2023, because “Withholdings at origin are being lower.”

He also justified that the growth in pension spending until March is being greater this year than last year, because in 2023 “the additional pensions were paid in the second semester and not in the first”, so this effect in the second semester will not occur. occur.

Thirdly, he has pointed out the impact of a series of extraordinary expenses, such as those related to the tariff deficit, the State’s judicial procedures or the 100 million euros of aid to farmers due to the drought.

“Why would our farmers wait for a change of government to receive the help they so desperately need, when the State is willing to make payments?” he asked.

Fernando Medina guaranteed that “everything recorded in the report of the General Budget Directorate (DGO) is fully compatible with the values” that he presented to his successor (a surplus of 0.7% of the Gross Domestic Product).

The former Minister of Finance highlighted that the budget execution data is in public accounting (from a cash perspective) and refers to three months of the year. The budget balance for the entire year used by the main national and international institutions is found in the national accounting and is published by the National Institute of Statistics.

“It is the beginning of the year, which will be followed by several quarters, in which the accounts, in terms of treasury logic, will certainly be quite different,” he said.

Fernando Medina also mentioned that the DGO data “does not include the value carried forward of more than 4.1 billion euros between the State accounts and the Social Security accounts—balances carried forward—which are evidently the set of resources available. that the State has. at one point”.

The State went from a surplus of 1,177 million euros to a deficit of 259 million euros in March, which had not happened since December 2022, according to the DGO’s budget execution summary.

This evolution was influenced by a decrease in income (7.4%) and an increase in expenses (15.1%).

The State’s tax revenues amounted to 12,013.5 million euros until March, 0.9% less than in the same period last year, according to the budget execution summary published today.

The year-on-year decrease is less pronounced than that recorded in February (when the drop was 3.7%) and is explained, according to the General Directorate of Rolling (DGO), by the effects of the payments corresponding to the deferred tax assets regime. IRC in February 2024 and extension of VAT payment.

In turn, the increase in effective primary spending is explained by increases in transfers (23%), personnel expenses (7.8%) and the acquisition of goods and services (7.2%).