Portugal 2010 deficit revised wider to 9.1% of GDP after highways included

April 25, 2011 - 0:0

Portugal’s 2010 budget deficit was revised to 9.1 percent of gross domestic product from 8.6 percent after the government added three highways onto its accounts, the National Statistics Agency said on Sunday in an e-mailed statement.

The government in March reported an 8.6 percent deficit for 2010, missing its target of 7.3 percent. Accounting changes ordered by Eurostat, the European Union’s statistics agency, forced the state to add more than 2 billion euros ($2.9 billion) to the 2010 deficit for impairment costs stemming from the 2008 seizure of Banco Portugues de Negocios SA and also for charges linked to the public-transportation system.
Without those additional charges, the deficit would have been 6.8 percent of GDP, Finance Minister Fernando Teixeira dos Santos said at the time.
The revision had to do with charges related to three highways, two of which previously had been free until the government introduced tolls.
“The economic rationale is that when final users pay the majority of the cost of the service, the investment is to be recorded on the balance sheet of the institutional unit receiving these fees,” according to the statement. “As the government receives these tolls, this implies that the assets integrated in these contracts are considered as an investment of the General Government, affecting in consequence the respective net borrowing.”
The statistics office also revised the 2009 budget to 10.1 percent of GDP from 10 percent. These changes will lead to a reduction in the deficits in the future, according to the statement.
Portugal earlier this month became the third country to request aid from the EU, after Greece and Ireland. International Monetary Fund, European Commission and European Central Bank officials are in Lisbon to prepare an estimated 80 billion-euro aid program.
(Source: Bloomberg)