LISBON: Dwindling tax revenues brought on by record joblessness and deep recession will force Portugal to seek breathing space, much like Greece has, on commitments to EU-IMF creditors, analysts say.
In data published Thursday, the Portuguese budget office said 2012 first half tax receipts dropped 3.5 percent compared with the same period last year, hit by a fall in consumption as the economy shrank and unemployment reached 15 percent.
As things stand, the government, which had forecast an increase in revenue of 2.6 percent this year, is set to miss this year's deficit target of 4.5 percent, several analysts agreed, if it cannot come up with an extra two-three billion euros ($2.5-3.8 billion).
Finance Minister Vitor Gaspar, unable to foresee the impact of austerity measures on the Portuguese economy, "has lost the fight", wrote business daily Diario Economico in an editorial.
Paulo Mourao, economist at the University of Minho, said the new data served to "lay the ground" for "needed flexibility on Portugal's rescue programme."
As part of the programme agreed in May 2011, in return for 78 billion euros in rescue loans, to be paid out in tranches over several years, Portugal has carried out deep budget cuts and pursued structural reforms.
In the deal, which followed similar ones for Greece and Ireland, Portugal agreed to bring its public deficit to the EU ceiling of 3.0 percent of output by 2013 after 4.5 percent in 2012.
Comments
Comments are closed for this article.