The budget execution, keeps performing, surplus on a cash basis +€2.8Bn YtD (until November) and roughly +€634Mn above November 2024. However, Budget execution is usually negative in December (Christmas extra pension), over the last two years, the deficit in December was around €2Bn. So, a surplus, on a cash basis, close to €1Bn (€2.8Bn-€2Bn), by the year end is a reasonable forecast (below our expectations one month ago). Meanwhile, government debt, Maastricht definition is now roughly at 92.2% of GDP vs. Government target YE25; 90.2%; so, Deposits should continue to come down in December to reach the government target of 90.2%. In fact, I wouldn’t be surprised if the government reached a target of debt to GDP below 90%.    

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The Bank of Portugal has just released, November’s Government debt data.     

The main highlights are the following:

1 – Gross Government debt (Maastricht definition): €281,383Mn; +450bpYoY/-66bpMoM and 92.2% of GDP last 12months vs 12MMA (12 Months Moving Average): 95.1% and 3MMA: 94.3% (target YE25: 90.2%);

2 – Net Government debt (after the deposits of Public Administration; Maastricht definition): €258,941Mn (+€2,446MnYtD)) +95bpYoY/+35bpMoM and 84.9% of nominal GDP vs. 12MMA: 87.1% and 3MMA: 84.8%.

Separately, the finance minister released Tuesday evening, November’s budget execution. We would highlight the following:

1 – Surplus: €2,836Mn YtD; +€634Mn vs. 2024YtD (January till November);

2 – Surplus in percentage of GDP, on a cash basis, last 12 months: +0.32% vs. 12MMA: +0.63% and 3MMA: +0.34%;

3 – Effective Revenues +7.3%YtD vs. 12MMA: 8.9% and 3MMA: 6.8% (initial budget 2025: +9.8%);

Direct Taxes: +5.1%YtD vs. budget: +1.0% (IRS: +8.5YtD and IRC: -3.8%YtD);

Indirect Taxes: +8.3%YtD vs. budget: +7.1% (VAT: +9.6% and “Tax on oil…”: +9.3%)  

Contributions (mainly social security contributions, CGA…): +8.2%YtD vs. budget: +5.4%;

Non-Tax and Non-Contributory Revenues (dividends, transfers…): +7.5%YtD vs. budget +34.8%.

4 - Effective Expenditure: +6.9%YtD vs. 12MMA: 6.6% and 3MMA: 9.0% (initial budget: +11.5%);

Employees: +8.2%YtD vs. budget, 5.3%;

Purchase of Goods and Services: 8.1%YtD vs. budget: +10.3%;

Interest and Other Charges: -4.0%YtD vs. budget +2.6%;

Current Transfers (mainly pensions and social support): +5.2%YtD vs. budget: 4.0% (Pensions, unemployment benefits…: +7.1%YtD and “CGA” (civil servant pensions): +4.8%YtD;

Others (subsidies, Investment…): +16.2%YtD vs. budget: 60%.

Comment: Public debt before deposits, Maastricht definition, in November, as expected outperformed, -€1.8Bn MoM; to €281.4Bn, roughly 92.2% of GDP, it was due to lower deposits, as we mentioned before, Deposits went down €2.7BnMoM to €22.4Bn. Nevertheless, net debt (after deposits) increased roughly €0.9Bn MoM, to €258.9Bn; +€2.4Bn YoY, vs. a budget execution over the last 12 months close to €1Bn positive surplus, so Net debt should be lower by roughly €1Bn, instead of +€2.4Bn.         

Meanwhile, November’s budget execution, released Tuesday evening, surplus €2.836Mn YtD; +€634Mn vs. 2024 (January till Nov.), continue to perform, mainly due to Effective Revenues +7.3%YtD (o/w IRS: +8.5%YtD, VAT: +9.6%YtD; Tax on Oil and Energy Products: +9.3%YtD and Social Security Contributions, +8.2%YtD); above Effective Expenditures +6.9%YTD; o/w Employees, +8.2%YtD; Purchase of Goods and Services: 8.1%YtD and Current Transfers: 5.2%YtD. Nevertheless, both, Revenues and Expenditures are performing below budget target, while it seems more difficult to decide in 2026 for discretionary fiscal expansionary measures.

All in all, the surplus on a cash basis should finish the year, positive, over the last two years the deficit in December was close to €2Bn; so, a surplus on a cash basis close to €1Bn, seems a fair estimate (below our expectations one month ago). Finally, assuming deposits will come down in December, close to €6Bn MoM (the IGCP, the public debt agency already announced that reimbursed €4.5Bn of debt in December), it means debt before deposits at year-end close to €275Bn or below, so debt to GDP at 90%/91% in line with the government target, seems  a fair estimate.