Allen, Richard, Hurcan, Yasemin, Murphy, Peter, Queyranne, Maximilien, and Ylaoutinen, Sami, “The Evolving functions and Organization of Finance Ministries,” forthcoming IMF Working Paper.
Centeno, Mario, and Coutinho Pereira, Manuel, 2005, “Wage Determination in General government in Portugal”, Bank of Portugal Economic Bulletin.
De Mooij, Ruud, Keen Michael, and Orihara, Masanori, 2015, “Taxation, Bank Leverage, and Financial Crisis”, IMF Working Paper 13/48.
Manuel Campos, Maria, and Centeno, Mario, 2012, “Public-Private Wage Gaps in the Period prior to the Adoption of the Euro: an Application based on Longitudinal Data,” Bank of Portugal Working Paper.
Prepared by Maximilien Queyranne (FAD) and Matthew Gaertner (EUR). The authors would like to thank Marco Cangiano, David Coady, and Ruud de Mooij (all FAD) for helpful suggestions, and the authorities for useful comments.
Approximately 3 ppts of GDP is attributed to the reclassification of hospitals in the general government.
The increase in GG revenue as a share of GDP does not only reflects changes in tax policy and revenue administration performance (numerator), but also GDP changes (denominator)
As the expenditure benchmark does not apply to countries subject to the Excessive Deficit Procedure (EDP).
Evidence suggest that expenditure target defined in relationship with GDP are less binding, as GDP targets are often set too high for ensuring fiscal constraints. See IMF WP 15/29, 2015.
The SP targets a decrease in public debt to 107.6 percent of GDP by 2019. In addition to the larger reduction in primary spending, this also reflects a larger projected decline in interest spending and stronger medium growth than under staff’s baseline scenario. The SP assumes real GDP growth of 2.4 percent in 2019, compared to staff’s projection of 1.2 percent.
Local governments have been developing MTBFs, but there is no consolidation for the local government sector as the whole.
The 2013 Local Finance Law created an early warning mechanism for local governments that break the debt ceiling rule. This mechanism could also be used to monitor expenditure growth.
This also aligns with the fiscal plans outlined in the Stability Program, which target expenditure savings of 2.5 percent of GDP from 2015–19 from rationalization of the public sector wage bill and social security reform.
M. Cangiano, Bank of Portugal Seminar, “Considerations on Public Sector Reforms in Portugal”, 2013.
In 2012, 28 percent of the 25-34 year-olds had achieved tertiary education, compared to 11 percent of the 55–64 years-olds.
There are usually two components in the wage drift: a positive one which increases wage spending (impact of discretionary promotion, automatic progression, and promotion related to civil servants passing competitive exams), and a negative one which reduces wage spending (savings due to lower level of compensation for new employees compared to higher level of compensation for employees retiring).
The following measures were cancelled: (i) the suspension of the holiday and the Christmas allowances for public pensioners; (ii) the new calculation formula for surviving dependants’ pensions; (iii) the reduction in pension benefits granted within the pension scheme for the public sector; and (iv) the progressive sustainability contribution on pensions. As a result of the cancellation of the progressive sustainability contribution, increases in employee’s social security contributions and in the standard VAT rate were also cancelled. Source: European commission, Occasional Papers 202, 2014, “The Economic Adjustment Programme for Portugal 2011–2014.”
See IMF Staff Discussion Note 11/11, Tax Biases to Debt Finance: Assessing the Problem, Finding Solutions, 2011.
The cap has been set to €1 million in net interest payments, and has been limited to a percentage of the EBITDA (from 70 percent in 2013 to 30 percent in 2017). In addition, the CIT rate cuts adopted in 2014 will contribute to limit the bias toward debt as less tax is saved at lower rates.
See IMF, World Economic Outlook, Chapter 3, October 2014. Demand effects are usually expected to be stronger where accompanied by economic slack and monetary accommodation, as in Portugal.
Central government SOEs investment in fixed assets was about 0.4 percent in 2012 and 2013, net of government investment grants for private and public investment (0.3 percent of GDP).
European commission, Occasional Papers 202, “The Economic Adjustment Program for Portugal 2011– 2014, 2014.
R. Allen, and al., forthcoming IMF Working Paper, “The Evolving functions and Organization of Finance Ministries”.