LISBON: Portugal's budget deficit narrowed in the first half and will fall to 2.2 percent of gross domestic product this year from 4.4 percent in 2015, below a target of 2.5 percent agreed with Brussels, the National Statistics Institute said on Friday.
The prediction sent to Brussels as part of Portugal's excessive deficit procedure is in line with the government's estimates and puts the country on course to cutting the gap below the 3 percent EU threshold for excessive deficits.
The INE also predicted that public debt will fall to 124.8 percent of GDP from last year's 129 percent. The government's original forecast in the budget was 127.7 percent. In the 12 months through the end of June, the budget deficit totaled 3.4 percent, narrowing from 3.7 percent at the end of March.
The 12-month figure incorporates a capital injection in Banco Banif at the end of last year, which pushed the 2015 deficit to 4.4 percent.
Portugal narrowly avoided EU sanctions after overshooting its 3 percent target last year and is now under increased pressure to meet the 2016 goal.
In the first half of this year alone, the deficit narrowed to 2.8 percent from 4.6 percent a year earlier.
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