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LISBON (Reuters) - Portugal's budget surplus plunged by 95% in 2024 after Prime Minister Luis Montenegro's government cut taxes for families and businesses and raised wages and pensions to boost the economy, official data showed on Friday.
Spending outpaced revenues, increasing by 9.2% last year. Total revenue only grew by 2.5%, resulting in a surplus of 354 million euros ($369 million) compared to a surplus of 7.6 billion euros in 2023, according to preliminary figures released by the finance ministry in a statement.
Still, the government said it was confident that it was on course to meet its target for a surplus of 0.4% of gross domestic product in 2024 that it committed to with the EU.
Portugal had a surplus of 1.2% of GDP in 2023 and expects to achieve a small budget surplus of 0.3% of GDP this year.
The Portuguese economy expanded 1.9% last year, compared with 2.5% in 2023, the National Statistics Institute said on Thursday.
The increased public spending in 2024 was mainly due to a 12.2% rise in social transfers such as pensions, a 7.9% hike in public sector wages and a 7.5% increase in the acquisition of goods and services, the finance ministry said.
Total revenue from taxes was supported by an 18% increase in corporate income tax revenue, while value-added tax revenues rose by 2.7% and tax revenue on petroleum products rose by 9.4%. Personal income tax revenues fell by 5.1%.
($1 = 0.9594 euros)
(Reporting by Sergio Goncalves; editing by Charlie Devereux and Gareth Jones)
