LISBON: Portugal's public deficit shrank by 10 percent in January-July from a year earlier, to 4.98 billion euros ($5.62 billion), which the Finance Ministry said was a better performance so far than envisaged in this year's budget.
The country barely avoided European sanctions last month after overshooting the 2015 deficit target with a gap of 4.4 percent of GDP, and has to meet this year's deficit goal of 2.5 percent, which means much bigger cuts are required in what remains of the year.
Brussels has on various occasions said that additional budget measures are likely to be needed due to an economic slowdown, but the government is adamant that its original budget plan, which has a cushion worth 0.3 percent of GDP to guarantee that this year's fiscal commitments are met, will be enough.
The Finance Ministry said the public administration revenues rose 2.8 percent in January-July, outpacing a 1.3 percent increase in spending and pushing the deficit down. The primary balance, which excludes debt costs, was a surplus of 316 million euros after a deficit of 585 million a year earlier.
The government took over in late 2015 and started reversing austerity policies of the previous administration.
It has promised Brussels it will cut the budget deficit mainly thanks to more disposable income made available to the population that it says should boost consumption.
But while the government still projects growth of 1.8 percent, most economists expect a much lower expansion around 1 percent.
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