had been treated as acquisition of shares and other equities with no effect on the
government deficit. Moreover, Eurostat stressed that - as some of these capital injections
might be reclassified as transfers - the notified deficit was to be considered as provisional
and likely to be increased.
In the spring of 2002 a commission headed by the Banco de Portugal and also composed
of representatives of the Ministry of Finance and the National Statistical Institute was set
up with the mandate of analysing and updating the government accounts. In September,
the figure for the 2001 deficit was revised upwards to 4.1 percent of GDP. This revision
was due to a number of factors: new data on the accounts of the local authorities; the
inclusion in the budget accounts of some injections of capital into publicly-owned
companies; changes to the methods used to account for expenditure carryovers and
revenue connected with the EU structural funds; and the expiration of a derogation
regarding the methods of recording tax and social contribution receipts accruing in the
year.
Between September 2002 and September 2004 the deficit was slightly revised upwards
twice, to 4.4 percent of GDP. In September 2004, Eurostat stressed that there were still
ongoing discussions with the Portuguese authorities concerning the consistency between
accrual and cash data for the period 2001-04. One year later, the 2001 deficit-to-GDP
ratio was revised downwards to 4.2 because of an upward revision of GDP. At that time,
Eurostat said that it intended to clarify reported cases of capital injections undertaken
between 2001 and 2004 by various governments, including Portugal. At present,
according to the European Commission 2006 spring forecasts, the Portuguese 2001
deficit is estimated to be 4.3 per cent of GDP. Therefore, the overall revision with respect
to the original data release amounts to 2.1 percent of GDP.
The initially reported increase in the deficit between 2000 and 2001 (from 1.5 to 2.2
percent of GDP) was markedly smaller than the one observed for the change in debt. The
latter rose from 2.5 percent of GDP in 2000 to 5.5 percent in 2001. Over time, the 2001
change in debt was revised only slightly and mostly because of GDP revisions. According
to the most recent European Commission data - the change in debt increased from 2.4 in
2000 to 5.3 in 2001. Panel A of Figure 6.2 shows the initial divergence between ESA95
deficit and the change in debt; Panel B shows the same variables after the revisions.
------Net borrowing----Change in debt
Figure 6.2 Portugal: Net Borrowing and Change in Debt (millions of euro)
A - The picture taken in March 2002 B - The picture taken in April 2006
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