LISBON (Reuters) - Portugal’s budget deficit in the 12 months to the end of March rose to 7.1 percent of gross domestic product from 6.4 percent at the end of 2012, data showed on Friday, but the government said it was on track for the 2013 deficit reduction goal.
The National Statistics Institute said the deficit in the first quarter alone jumped to 10.6 percent of GDP from 7.9 percent of GDP in the first quarter of 2012, the institute said.
Finance Minister Vitor Gaspar said this week the quarterly deficit was likely to rise sharply but it would have little impact on the country’s ability to reduce the deficit in 2013.
Portugal’s deficit goals under a bailout were eased by creditors in March and the government has suggested it could seek to further relax the goal for next year if the economy worsens. Under the weight of austerity measures due to its bailout, Portugal has entered a third year of recession.
Portugal is aiming to cut the budget deficit to 5.5 percent of GDP in 2013 from 6.4 percent last year.
Budget Secretary Luis Morais Sarmento told reporters after the release that the first-quarter accounts incorporated 700 million euros use to recapitalize banks - a sum that came out of the bailout funds and therefore does not increase the debt stock.
Sarmento said more recent encouraging tax revenue data for January-May that left the public deficit comfortably below the first-half ceiling agreed with the lenders “allow us to have confidence that we will meet all targets”.
The government told the European Commission this week that the end-March deficit and debt performance goals had been met.
Reporting by Axel Bugge; Editing by Angus MacSwan