Portuguese public deficit shoots up: official data

Budget overspending by bailed-out Portugal shot up to 10.6 percent of output in the first quarter of the year mainly because the state helped to recapitalise a private bank, official data showed on Friday.

This was a big increase from the deficit of 7.9 percent in the same period of last year.

That outcome was in any case more than twice the European Union ceiling of a deficit not exceeding 3.0 percent of gross domestic product.

In the whole of last year, Portugal had a public deficit of 6.4 percent, exceeding the target of 5.5 percent promised to the EU, the European Central Bank and the International Monetary Fund.

Portugal was hit on Thursday by a strike, the latest in a series, against deep budget cuts and tax increases by the government in order to respect conditions from the EU and IMF in return for bailout funding.

The national statistics office Ine, which published the latest data, said that the deficit had increased because spending had risen faster than revenues.

The main cause was state funding of 700 million euros ($915.5 million), equivalent to 1.8 percent of GDP, to recapitalise the private bank Banif, the eighth-biggest bank in Portugal, Ine said.

On Tuesday, Finance Minister Vitor Gaspar had presaged the figures by saying that the quarterly deficit could go above 10.0 percent of output because of an accounting change regarding the capital increase for Banif.

Gaspar said that, excluding this factor, the deficit would be about 8.7 percent of output.