Exceeding targets

Government finances are beating budget targets despite record investment projects of €700 million.

The country’s deficit had reached €347 million in November 2023, which is almost half the deficit that had been observed a year earlier. This is a significant result, given that the Budget target for the deficit was that it would be larger in absolute terms than it was in 2022.

This improvement of around €309 million in Government’s financial situation came despite public expenditure having increased by 6% over the previous year. This is because government revenues increased at more than double that rate, or by 13%. Among the most striking increases were an improvement of €382 million in income tax revenue (21% more than the previous year) and an improvement of €94 million in customs duties and licences (17% more than the previous year). VAT revenues were €78 million better while that those from Social Security Contributions were up by €92 million. Government also managed to bring in revenue from grants of almost €193 million, representing a 12% increase on the previous year.

When comparing the performance of Government revenue this year with what happened last year, it turns out that the Government has so far brought in 89% of the amount foreseen in the Budget speech, against a rate of 87% that had been collected at the same time a year ago. This means that the Government’s revenue so far is some 2% better than forecast in the Budget.

In contrast, outlays, although increasing, are doing so at a slower pace than foreseen in the Budget speech. In fact, when looking at total expenditure so far it has reached 82% of the Budgetary target for this year, against 85% observed at the same time a year ago. This means that, by November, total expenditure growth was almost 4% lower than the expected path.

While it seems that the Government is managing to maintain good control over public expenditure, it is still strongly increasing capital and social investment. By November, capital expenditure had reached a record figure of almost €700 million. This is an increase of €110 million, or almost 20%, more than in 2022. This investment mainly reflected a bigger expenditure on energy-related projects as well as on new schools and green and open spaces.

When it comes to social investment this has reached an extraordinary figure of almost €2 billion. The funds disbursed to this end are €173 million, or 10%, more than in 2022. Even when it comes to public health, Government’s allocation rose to a record amount of almost €870 million, while education saw an injection of €722 million. On just these two pillars, Government has increased its financial commitments by almost €110 million, or by more than 7%.

At the same time, up to November, Government had allocated €360 million in subsidies, mainly to keep electricity and fuel prices stable.

Central government debt amounted to €9,578 million at the end of November. This means an improvement of €103 million over the month of October. This is yet another confirmation of how the performance of the public finances is much better than forecast, and that in all likelihood Government’s budgetary targets will not just be met but will be surpassed. 

Jan-Nov 2022Jan-Nov 2023% of the total for the year 2022% of total forecast for the year 2023
Entry5,1085,78287%89%
Total cost5,7636,12985%82%
       Recurrent expenditure5,0185,238  
       Capital expenditure589698  
       Interest156193  
Deficit65634772%36%

Photo: Polina Kovaleva

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