July 24, 2013 / 5:38 PM / 4 years ago

Portugal first-half deficit well below bailout ceiling

LISBON (Reuters) - Portugal’s public deficit ended the first half of 2013 at 3.85 billion euros, well below the 6 billion euro ceiling set for the period under its international bailout, the finance ministry said on Wednesday.

“Portugal has met the goal ... established for the first half by the economic and financial adjustment program,” the ministry said in a statement.

The country’s economy is in its worst recession since the 1970s, squeezed by the tough terms of its bailout from the European Union and International Monetary Fund, but the government expects a return to meager growth in 2014.

The ministry added that the actual deficit number was not comparable with year-ago levels as the country then used over 2 billion euros ($2.6 billion) of bank pension funds to plug the gap. Discounting this and other one-off measures, the ministry said the deficit fell by nearly 370 million euros.

It said fiscal revenues rose 9 percent in the period from a year ago. The pace of revenue growth in the first half exceeded the projected 6.9 percent rise for all of 2013.

Even so, the central administration’s spending rose 6.3 percent in the first half from a year earlier, driven by unemployment benefits and one-off transfers to public sector workers, even though the growth rate slowed from May levels.

Lisbon has to cut the budget deficit to 5.5 percent of gross domestic product (GDP) this year from last year’s 6.4 percent and then to 4 percent in 2014.

Reporting by Andrei Khalip; Editing by Ruth Pitchford

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