The government reported on Monday a public deficit of 6.7 billion euros in the first half of 2020, jumping 10 times compared to the same period last year, due to the impact of the coronavirus pandemic.
Total revenues fell 9.5% and tax revenues dropped 14.5% as a consequence of a “sharp decrease in economic activity”, while expenditures grew 5.4% due to subsidies for laid-off workers, social benefits, health equipment purchases and hiring doctors and nurses, the finance ministry said in a statement.
“Budget execution highlights the effects of the COVID-19 pandemic on the economy and public services following mitigation policy measures,” the ministry said.
Forecasts of how much the country’s gross domestic product will drop this year because of the coronavirus outbreak range from the government’s own 6.9% to Bank of Portugal’s 9.5%.
The tourism-dependent economy has been hard hit by the pandemic and lockdowns at home and abroad, and businesses fear they will lose the crucial summer season due to travel restrictions still in place.
Portugal’s government expects a deficit equal to 7% of GDP in 2020, an especially painful setback after the government announced that the country had its first budget surplus in 45 years at the end of 2019.
Last year, the country reported 2.2% growth and a budget surplus of 0.2% of GDP.