Portugal’s first quarter budget deficit pegged at 0.7%

Portugal has started the year with a budget deficit of 0.7% of GDP, according to first-quarter figures released today by INE Statistics Portugal.

“Taking into account quarterly figures rather than the year ending in that quarter, the general government balance in the first quarter of 2026 stood at -€510 million, corresponding to -0.7% of GDP, compared with 0.0% in the same period last year,” reads INE’s bulletin.

Total revenue grew by 6%, below the 7.9% growth in total expenditure.

Looking at the components of revenue, “the 5.5% growth in current revenue stems mainly from increases in social contributions (7.1%) and taxes on production and imports (4.3%) and, to a lesser extent, from increases in other current revenue (14.4%) and sales (10.7%)”.

Capital revenue rose by 29% due to increased revenue from the PRR, Plan for Recovery and Resilience (which ends in August).

On the expenditure side, current expenditure grew by 6.4%, “as a result of the increase in other current expenditure (21.4%), subsidies (9.7%), intermediate consumption (7.0%), employee compensation (6.7%), social benefit expenses (4.6%), and interest expenses (1.1%).”

Primary current expenditure, which excludes interest payments, rose by 6.7%, while capital expenditure increased by 31.2%, driven by growth in investment and other capital expenditure.

Compared with the first quarter of 2025, there was a decline in the balance under both public accounting and national accounting. The budget balance moved from a position of balance (0.0%) to a deficit.

INE also explained that “due to the tax installment payment measures established in the VAT Code, an adjustment was made to revenue from taxes on production and imports in the period in which the payment obligation arose.”

In the first quarter of this year, there was also an impact from the implementation of exceptional measures deferring tax payments as part of support measures for areas affected by the declaration of a state of calamity.

(Between the end of January and the beginning of March, Portugal was affected by the passage of storms Kristin, Leonardo, and Marta, which caused fatalities as well as several hundred injuries, displacements, and evacuations. The storms, which affected mainland Portugal for around three weeks, particularly in the Central, Lisbon and Tejo Valley, and Alentejo regions, caused the total or partial destruction of thousands of homes, businesses, and facilities; the fall of trees and structures; disruptions to electricity, water, and communications; flooding and flash floods, resulting in damages exceeding €5 billion euros.)

Source: LUSA