Monthly edition Portuguese version published on the 26 th June 2018 Budget General Directorate Internet site: http://www.dgo.gov.pt E-mail: dgo@dgo.gov.pt
1. Summary OVERALL BALANCE 1. Summary According to the 2018 May implementation data available, the General Government balance on a cash basis approach (that is, revenues minus payments) amounted to -2,224.6 million euros, which has underlying a deterioration of 1,591.7 million euros, compared to the amount recorded in the same period of 2017 (-633 million euros). The primary surplus was 1,505.5 million euros, 1,259.6 million euros lower than in 2017. Table 1 General Government consolidated accounts Period: January to May Cumulative YOY Change implementation Absolute Relative (%) 2017 2018 April May April May Millions Current revenue 29 975,0 29 380,0 895,7-595,0 3,9-2,0-1,9 Tax 17 554,4 16 240,8 153,8-1 313,6 1,2-7,5-4,3 Social security contributions 7 692,0 8 065,8 289,9 373,8 4,7 4,9 1,2 Other current revenue 4 678,7 5 037,8 476,9 359,0 13,3 7,7 1,2 Consolidation differences 49,8 35,7-25,0-14,2 - - 0,0 Capital revenue 742,4 639,6-22,6-102,8-4,3-13,9-0,3 Consolidation differences 13,3 7,1 6,2-6,2 - - 0,0 Effective revenue 30 717,4 30 019,6 873,1-697,8 3,8-2,3 Contribution (p.p.) Current expenditure 29 553,9 30 400,9 1 100,5 847,0 4,7 2,9 2,7 Compensation of employees 7 538,1 7 400,5-163,5-137,6-2,7-1,8-0,4 Purchase of goods and services 4 317,3 4 770,4 410,4 453,1 12,3 10,5 1,4 Interests and other charges 3 398,1 3 730,1 582,7 332,1 20,0 9,8 1,1 Current transfers 13 547,6 13 731,1 187,9 183,5 1,7 1,4 0,6 Subsidies 301,2 365,0 64,5 63,8 28,3 21,2 0,2 Other current expenditures 444,4 401,4 13,3-43,0 4,6-9,7-0,1 Consolidation differences 7,3 2,4 5,3-4,9 - - 0,0 Capital expenditure 1 796,5 1 843,3-62,8 46,8-4,2 2,6 0,1 Investments 1 419,6 1 458,2-25,1 38,5-2,1 2,7 0,1 Capital transfers 318,6 349,9 10,9 31,2 4,2 9,8 0,1 Other capital expenditures 35,2 8,8-25,2-26,4-76,2-74,9-0,1 Consolidation differences 23,0 26,4-23,5 3,4 - - 0,0 Effective expenditure 31 350,4 32 244,2 1 037,7 893,8 4,1 2,9 Overall balance -633,0-2 224,6-164,6-1 591,7 Primary expenditure 27 952,3 28 514,1 455,1 561,8 2,0 Current balance 421,1-1 020,9-204,9-1 442,0 Capital balance -1 054,1-1 203,7 40,3-149,7 Primary balance 2 765,1 1 505,5 418,1-1 259,6 Note: Cash basis amounts consolidated of flows among different subsectors; differences against the values published in 2017 are due to data updates. Source: Budget General Directorate and Social Security Financial Management Institute The evolution of the General Government balance was driven by a number of effects, both on the revenue side (-2.3%) and on the expenditure side (+2.9%). Regarding revenue, it highlights the reduction in the Corporate Income Tax (CIT) revenue, which, by means of changes in the deadline for delivering the 2017 tax 1
1. Summary statements, will only be received in June 2018 1 and the different profile of the Personal Income Tax (PIT) reimbursements, not yet fully compensated. In which concerns expenditure, interest and other charges show a strong growth - associated with the payment of swap coupons to the bank institution Banco Santander Totta, S.A., under the agreement established between public transport corporations, the Portuguese Republic and this credit institution (which has no impact on the National Accounts approach) and interest on Treasury Bonds - as well as the acquisition of current goods and services, which reflects a significant amount of payments of National Health Service s arrears. As regards the revenue behavior, the observed decrease (697.8 million euros compared to the same period of the previous year) mainly reflects the negative evolution of direct taxes (-1,313.6 million euros), associated with the delay of the CIT settlement and the effect, even if less significant than the previous month, of the PIT reimbursements. The expenditure growth (by 893.8 million euros compared to the period until May 2017) was mainly due to the evolution of: i) Expenditure on the acquisition of current goods and services (contribution of 1.4 p.p.), influenced by the payment of overdue debts by entities of the National Health Service, highlighting the 4% growth of this NHS expenditure category, on the financial perspective; ii) Interest and other charges, with a contribution of 1.1 p.p., which was strongly influenced by the settlement of swap coupons by Metropolitano de Lisboa, E.P.E. 2 (269.5 million euros) and by Metro do Porto, S.A. 3 (36.3 million euros) to the bank institution Banco Santander Totta, S.A. (under the agreement established in May 2017 between public transport corporations, the Portuguese Republic and this credit institution regarding swap contracts) and by the higher interest associated with Treasury Bonds; iii) Current transfers (contribution of 0.6 p.p.), in particular the Social Benefit for Inclusion 4 (+100 million euros), the financial contribution to the European Union budget (+73.8 million euros), and the compensation for the victims of the 2017 forest fires (32.5 million euros). In the opposite direction, the evolution of pensions and the compensation of employees benefited from the end of the Christmas bonus payment by twelfths 5. In which concerns the compensation of employees, it also highlights the fact that the unfreezing of promotions and progressions of careers in public sector, determined by the 2018 State Budget Act, has not yet been fully reflected in the budget implementation and that the second phase of the unfreezing process will occur in September 6. The deterioration of the General Government s balance (-1,591.7 million euros), due to the unfavorable evolution of the State sub-sector (-1,544.5 million euros), the Autonomous Services and Funds sub-sector (-276 million euros) and of the Local Government (-20.5 million euro). In the opposite direction, it highlights the positive contribution from the Social Security (+202.1 million of euros) and from the Regional Government (+47.3 million euros). 1 Usually received in May. 2 Metropolitano de Lisboa, S.A. is the Portuguese public corporation responsible for the management of Lisbon City's light rail network. 3 Metro do Porto, S.A., the Company for the Management of Oporto's Light Rail Network. 4 A social welfare allowance created in October 2017, aimed at protecting in the event of disability and of insufficient resour ces of persons with disabilities. 5 In 2017, as determined in the State Budget, one half of the Christmas bonus due to the public sector employees and pensioners was subject to the payment by twelfths, with the payment of the remaining 50% having occurred in November (or December, regarding the general Social Security scheme). In turn, in 2018, the whole of this benefit will be paid in November/December. 6 It should be noted that the payment of the unfrozen progressions and promotions is phased as follows: 25% from January 2018; 25% additional from September 2018; 25% additional from May 2019 and the remaining 25% from December 2019. 2
1. Summary Table 2 General Government budgetary implementation by sub-sectors revenue, expenditure and balance Period: January to May Millions Overall balance Revenue Expenditure YOY Change Rate (%) 2017 2018 2017 2018 2017 2018 Revenue Expenditure Central Government and Social Security -1 157,8-2 776,2 28 054,4 27 332,5 29 212,2 30 108,7-2,6 3,1 Central Government (CG) -2 443,8-4 264,3 21 805,0 20 553,7 24 248,8 24 818,0-5,7 2,3 State subsector -2 703,4-4 247,9 16 984,1 15 725,9 19 687,5 19 973,8-7,4 1,5 Autonomous Services and Funds 259,6-16,4 11 463,1 11 732,5 11 203,5 11 748,8 2,3 4,9 of which: CG State Owned Enterprises -452,8-909,5 3 446,1 3 498,4 3 898,9 4 407,8 1,5 13,1 Social Security 1 286,0 1 488,0 10 601,4 10 950,1 9 315,5 9 462,0 3,3 1,6 Regional Government -78,2-30,9 949,1 965,8 1 027,4 996,7 1,8-3,0 Local Government 603,1 582,5 3 126,4 3 144,9 2 523,4 2 562,4 0,6 1,5 General Government -633,0-2 224,6 30 717,4 30 019,6 31 350,4 32 244,2-2,3 2,9 Note: Cash basis amounts not consolidated of flows among different sub-sectors; differences against the values published in 2017 are due to data updates. Source: Budget General Directorate Central Government and Social Security balance (cash basis) until amounted to -2,776.2 million euros (-1,157.8 million in 2017), while the primary balance was +853.4 million euros (+2,097.8 million in 2017). Revenue s rate of growth was -2.6%, while expenditure increased 3.1%. On its turn, primary expenditure increased 2%. Regional and Local Government recorded a balance (cash basis) of 551.6 million euros, that is +26.8 million euros in comparison with the previous year. Local Government showed a balance of 582.5 million euros and Regional Government of -30.9 million euros, -20.5 million euros and +47.3 million euros than until May 2017, respectively. General Government non-financial debt amounted to 2,148 million euros at the end of, 51 million euros lower than in the same period of the previous year. This evolution was due to the decrease in the amount recorded by the Local Government (-114 million euros) and by the Regional Government (-100 million euros), while this effect was partially offset by the increase registered by the Central Government (+162 million euros). Compared with the previous month, there was a rise of 42 million euros, reflecting the behavior of Central Government (+68 million euros), Regional Government (+2 million euros), while the Local Government recorded a decrease (-29 million euros). 3
1. Summary Table 3 General Government Non-financial Liabilities - Stock in the end of the period Period: January to May Central Gov. Goods and Services Acquisition 291 288 287 290 279 339 338 231 240 287 312 309 342 33 51 Capital Goods Acquisition 9 9 16 24 15 18 31 8 5 12 25 27 17-10 8 Transfers inside GG 28 19 18 19 20 38 44 13 26 33 25 26 31 5 3 Transfers outside GG 41 33 31 30 30 36 39 25 260 167 142 120 143 23 102 Others 143 164 143 129 156 124 131 97 111 125 125 124 141 17-1 Central Government - Total 512 513 496 490 500 555 584 373 643 624 630 606 674 68 162 Goods and Services Acquisition 83 81 101 65 99 64 68 29 52 43 77 41 44 3-39 Regional Gov. Capital Goods Acquisition 30 29 32 29 31 30 31 33 33 35 32 37 41 4 11 Transfers inside GG 1 0 0 0 0 0 5 16 16 0 1 0 0 0-1 Transfers outside GG 34 31 28 29 27 27 27 23 24 24 29 27 26-1 -8 Others 233 253 202 201 201 203 216 194 198 197 198 172 170-3 -63 Regional Government - Total 381 394 363 324 360 325 347 294 324 299 337 278 280 2-100 Goods and Services Acquisition 515 507 508 489 471 489 493 427 469 491 498 490 472-18 -43 Local Gov. Nature of Debt Millions 2017 2018 monthly YOY May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May variation variation Capital Goods Acquisition 279 273 292 293 282 302 292 229 257 273 274 277 257-20 -22 Transfers inside GG 37 34 34 30 28 26 25 17 26 30 34 34 38 4 1 Transfers outside GG 41 39 39 35 32 32 30 22 29 31 31 32 35 3-6 Others 434 432 400 377 364 340 323 307 353 387 389 389 390 2-44 Local Government - Total 1 307 1 286 1 273 1 223 1 176 1 189 1 163 1 002 1 134 1 211 1 226 1 222 1 193-29 -114 General Government 2 199 2 192 2 132 2 038 2 036 2 068 2 094 1 670 2 101 2 134 2 193 2 106 2 148 42-51 Source: Budget General Directorate (DGO), Local Government Directorate (DGAL), Azores Autonomous Region Budget and Treasury Regional Directorate and Madeira Autonomous Region Budget and Treasury Regional Directorate The stock of public entities arrears at the end of amounted to 977 million euros, representing a reduction of 40 million euros regarding May 2017 and an increase of 54 million euros over April 2018. Table 4 Arrears (overdue for more than 90 days) - Stock in the end of the period (consolidated) Period: January to May Subsector General Government 1 016 1 079 1 103 1 151 1 211 1 276 1 361 1 079 1 194 1 272 971 923 976 54-40 Central Government excl. Health Subsector 20 20 21 20 18 19 18 16 18 19 21 23 24 1 4 Health Subsector 4 4 4 5 5 3 8 7 4 5 10 9 9-1 5 National Health Service - SOE Hospitals 739 806 852 903 961 1 024 1 103 837 951 1 024 705 655 705 50-35 Reclassified Public Enterprises 12 12 13 12 14 14 14 12 12 12 12 12 12 0 0 Local Government 138 134 115 112 114 117 119 109 113 114 118 121 121 0-18 Regional Government 103 102 99 99 99 98 99 98 96 98 104 104 106 3 3 Other Entities 1 1 1 1 1 0 1 1 0 0 0 0 0 0 0 Non-reclassified Public Enterprises 1 1 1 1 1 0 1 1 0 0 0 0 0 0 0 Total 1 017 1 080 1 104 1 152 1 213 1 276 1 362 1 080 1 195 1 273 971 923 977 54-40 (*) - Provisional data. In the case of non-reclassified public enterprises, and since that this information is not available, the stock is the same of the previous month Source: Compiled by Budget General Directorate (DGO) based on data collected by Local Government Directorate (DGAL), DGO, Azores Autonomous Region Budget and Treasury Regional Directorate and Madeira Autonomous Region Budget and Treasury Regional Directorate. The year-on-year reduction was attributable to the National Health Service s institutions belonging to the State-Owned Enterprises (SOE) sector (-35 million euros) and to the Local Government (-18 million euros). With regard to the monthly variation (+54 million euros), the decline was mainly due to the Health Sector and National Health Service s institutions belonging to the State-Owned Enterprises (SOE) sector. Note that the capital endowments made by the State in these institutions at the end of 2017 were used to pay arrears. Millions 2017 2018 monthly YOY May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May(*) variation variation 4
2. Central Government and Social Security 2. Central Government and Social Security OVERALL BALANCE Central Government and Social Security overall and primary balances implicit to the period until implementation reached -2,776.2 and +853.4 million euros, respectively, which have implicit a deterioration of the overall balance (-1,618.4 million euros) and of the primary balance (in 1,244.4 million euros) over the same period of the previous year. Table 5 - Central Government and Social Security consolidated account Period: January to May 2017 2018 YOY cumulative change Revenue/expenditure/balance Cumulative Absolute Relative (%) implementation April May April May Millions YOY Change Rate Contrib. (p.p.) Current revenue 27 473,6 26 876,0 968,3-597,6 4,6-2,2-2,1 Tax 15 729,0 14 387,6 161,4-1 341,4 1,4-8,5-4,8 Direct taxes 5 733,8 3 921,6-326,1-1 812,2-7,5-31,6-6,5 Indirect taxes 9 995,2 10 465,9 487,5 470,7 6,4 4,7 1,7 Social security contributions 7 688,2 8 065,4 292,5 377,2 4,7 4,9 1,3 Current transfers 584,9 721,8 67,2 137,0 12,6 23,4 0,5 Other current revenue 3 426,2 3 654,8 474,3 228,6 19,0 6,7 0,8 Consolidation differences 45,3 46,4 Capital revenue 580,9 456,5-61,1-124,4-14,7-21,4-0,4 Sale of investment good 93,2 34,9-35,9-58,3-59,0-62,6-0,2 Capital transfers 465,4 398,4-32,3-67,0-9,6-14,4-0,2 Other capital revenue 21,4 16,1-4,3-5,3-22,7-24,8 0,0 Consolidation differences 0,9 7,1 Effective revenue 28 054,4 27 332,5 907,3-721,9 4,2-2,6 Memo Item: Tax and contributions revenue 23 417,3 22 453,0 453,9-964,3 2,5-4,1-3,4 Non tax revenue 4 637,2 4 879,5 453,4 242,3 13,0 5,2 0,9 Current expenditure 27 913,1 28 759,5 1 137,8 846,5 5,1 3,0 2,9 Employees 6 188,5 6 045,7-144,2-142,8-2,9-2,3-0,5 Purchase of goods and services 3 154,2 3 602,5 427,8 448,3 17,5 14,2 1,5 Interests and other charges 3 255,6 3 629,6 620,0 374,0 22,1 11,5 1,3 Current transfers 14 641,1 14 844,0 212,0 202,9 1,8 1,4 0,7 Subsidies 273,9 344,9 62,1 71,0 28,9 25,9 0,2 Other current expenditure 379,9 292,8-37,8-87,1-15,5-22,9-0,3 Consolidation differences 19,8 0,0 Capital expenditure 1 299,2 1 349,2-70,8 50,0-6,1 3,9 0,2 Investments 893,9 945,2-20,1 51,4-2,5 5,7 0,2 Capital transfers 355,1 366,5-2,2 11,4-0,7 3,2 0,0 Other capital expenditure 27,1 2,1-25,1-25,0-94,1-92,2-0,1 Consolidation differences 23,1 35,3 Effective Expenditure 29 212,2 30 108,7 1 067,0 896,5 4,5 3,1 Memo Item: Current and capital transfers 14 996,2 15 210,5 209,8 214,3 1,7 1,4 0,7 Other current and capital expenditure 407,0 294,9-62,8-112,2-23,2-27,6-0,4 Overall balance -1 157,8-2 776,2-159,7-1 618,4 Primary expenditure 25 956,6 26 479,1 447,0 522,5 2,2 2,0 1,8 Current balance -439,5-1 883,5-169,5-1 444,0 Capital balance -718,3-892,7 9,8-174,4 Primary balance 2 097,8 853,4 460,3-1 244,4 Source: Budget General Directorate and Social Security Financial Management Institute 5
Jan Feb March April May June July Aug Sept Oct Nov Dec million euros 2. Central Government and Social Security Chart 1 Central Government and Social Security balance evolution 1 000 0-1 000-2 000-3 000 2018 2017-4 000-5 000 Source: Budget General Directorate and Social Security Financial Management Institute The unfavorable evolution of the overall balance resulted from the combined effect of the increase in expenditure (+ 3.1%) and the reduction in revenue (-2.6%). The evolution of revenue was determined by the decrease in tax revenue (-8.5%) (mainly associated with the Corporate Income Tax (CIT) revenue s behavior, taking into consideration the extension of the period for the delivery of the 2017 tax statements and for the payment of the difference between the tax calculated thereon and the sums already paid on account), notwithstanding the favorable behavior of the contributions to social security schemes (+4.9%) and of the non-tax and non-contributory revenue (+5.2%). The increase in expenditure was mainly driven by: i) The acquisition of current goods and services (+14.2%), mostly reflecting the regularization of non-financial liabilities by entities of the National Health Service, using the capital endowments made by the State in these institutions at the end of 2017; ii) The interest and other charges (+11.5%), in particular those relating to swap contracts, supported by Metropolitano de Lisboa, E.P.E. 7 and by Metro do Porto, S.A. 8, following the agreement reached with the Banco Santander Totta S.A. and those concerning the direct State debt. It should be noted that primary expenditure increase was lower (+2%), taking into account the contribution of interest and other charges (+1.3 p.p.). EXPENDITURE The Central Government and Social Security expenditure grew 3.1% until and primary expenditure increased by 2%. The primary expenditure s evolution was mainly determined by the increase in the acquisition of goods and services - mainly due to the regularization of non-financial liabilities by the National Health Service and, 7 Metropolitano de Lisboa, S.A. is the Portuguese public corporation responsible for the management of Lisbon City's light rail network. 8 Metro do Porto, S.A., the Company for the Management of Oporto's Light Rail Network. 6
2. Central Government and Social Security to a lesser extent, in transfers, with emphasis on the financial contribution to the European Union budget. In the opposite direction, it highlights the decrease in compensation of employees, influenced by the different payment profile of the Christmas bonus compared to 2017 and by the fact that the unfreezing of promotions and progressions of careers in public sector, determined by the 2018 State Budget Act, has not yet been fully reflected. The compensation of employees decreased 2.3% (-2.9% until April), partially influenced by the different payment profile of the Christmas bonus 9 and by the fact that the unfreezing of promotions and progressions of careers in public sector, determined by the 2018 State Budget Act, has not yet been fully reflected. It should be noted that the payment of the unfrozen progressions and promotions is phased as follows: 25% from January 2018; 25% additional from September 2018; 25% additional from May 2019 and the remaining 25% from December 2019. Excluding the effect of the different payment profile of the Christmas bonus, compensation of employees would have increased 0.3%, explained by the rise in the overtime spending in the health sector, as well as by the effect of the payment in 2018 of contributions to social security schemes relating to 2017, by the basic and secondary education institutions. The purchase of goods and services expenditure s change rate (+14.2%, which compares with +17.5% until April) was influenced by the regularization of non-financial liabilities by entities of the National Health Service, using the capital endowments made by the State in these institutions at the end of 2017. In addition, as a contribution to this expenditure category s growth, it highlights the increase in: i) The expenditure of Rádio e Televisão de Portugal, S.A. 10, associated to the broadcasting rights of several sport events; and ii) The maintenance actions on railway and road infrastructures, by Infraestruturas de Portugal, S.A. 11. In the opposite direction, it was relevant the lower level of reimbursements by the ADSE 12. Interest and other charges expenditure increased 11.5% (+22.1% until April), due to the behavior of the direct State debt interest charges (+6.7%) and to the evolution of interest and financial charges paid by the public entities reclassified to the Central Government since 2012 (+60.1%). In which concerns the former, the growth was due, mainly, to the increase in treasury bonds interest, as a consequence of a rise in the outstanding balance of treasury bonds with coupon payment in April and, to a lesser extent, to the evolution of "Other instruments", primarily owing to the payment of interest associated with treasury bonds of variable income issued in the second and third quarters of 2017 and to the reduction of the net interest repayment of swaps. 9 The State Budget Law for 2018 no longer foresees the distribution of the payment of the Christmas bonus in the course of the year, recovering the full payment regime in November. 10 RTP, the Portuguese public broadcaster. 11 Public corporation responsible for constructing, operating, rehabilitating, extending and modernizing the road and rail networks. 12 ADSE is the public health subsystem of civil servants and pensioners, other than military and security forces (which have a special health subsystem). 7
2. Central Government and Social Security Regarding the latter, it was mainly at stake the payments by Metropolitano de Lisboa, S.A. 13 and, even if to a lesser degree, by Metro do Porto, S.A. 14, to the bank institution Banco Santander Totta, S.A. under the agreement established between public transport corporations, the Portuguese Republic and this credit institution regarding swap contracts and, to a lesser extent, the interest paid by the Resolution Fund on the loan granted by a group of credit institutions, in the context of the resolution measure applied to Banco Espírito Santo 15. Transfers change rate was +1.4% (+1.7% until April), to which contributed most significantly: i) The impact of expenditure associated with the Social Benefit for Inclusion, a social welfare allowance created in October 2017, aimed at protecting in the event of disability and of insufficient resources of persons with disabilities (100 million euros until May); ii) The increase in the Portuguese financial contribution to the European Union budget (+10.9%), by way of both a higher twelfth in 2018 and a different twelfths anticipation pattern 16 ; and iii) The payment of compensations for the death of the forest fires victims in 2017. In turn, the main effects with downward impact on expenditure were as follows: i) The reduction of pension expenditure (-1.1% regarding the general social security scheme and -2.1% in which concerns the convergent social protection scheme for pensions, managed by Caixa Geral de Aposentações 17 ), which was justified by the fact that, on the one hand, half of the Christmas bonus was paid by twelfths in 2017 and, on the other hand, part of the invalidity pensions is now paid by means of the Social Benefit for Inclusion, despite the impact of the attribution of the annual rise in January 2018 18 and of an extraordinary update in August 2017 19 ; and iii) The reduction in unemployment benefits expenditure (-5.8%), reflecting the impact of the improvement of the labor market situation and the decrease in the unemployment rate. The rise in subsidy expenditure (+25.9%, which compares with +28.9% until April) was attributable to: i) The increase in Social Security subsidy payments, related to vocational training and social action; ii) The different payment profile of indemnities as a compensation for the services of public interest rendered by Lusa Agência de Notícias de Portugal, S.A. 20 21 ; iii) The increase in interest subsidies for housing; and iv) The payment of subsidies by the Parliament related to the campaign for the 2017 Local Government elections. 13 Metropolitano de Lisboa, S.A. is the Portuguese public corporation responsible for the management of Lisbon City's light rail network. 14 Metro do Porto, S.A. is the company for the management of Oporto's light rail network. 15 Banco Espírito Santo was a Portuguese bank based in Lisbon that on August 2014 was subject of a resolution measure. 16 Under the existing Community legislation (Regulation (EU, Euratom) N.o 609/2014 of 29 May), the European Commission may require to the Member States, in the first quarter of the each year, to advance up to two-twelfths of their contribution to the EU budget to meet specific needs relating to the payment of expenditure under the European Agricultural Guarantee Fund (EAGF) and in the light of the cash position of the Union. 17 Caixa Geral de Aposentações (CGA) is the public body that administrates the Portuguese civil servants pension scheme. However, from 2006 onwards, the new civil servants became part of the general social security scheme, so that the pension system managed by CGA has been closed since that year. 18 The update of the pensions granted before January 2017 was generally achieved by applying the following percentages: 1.8% for pensions of 857.80 or less; 1.3% for pensions of more than 857.80 and less than 2,573.40; 1.05% for pensions of more than 2,573.40, with pensions of more than 5,146.80 generally not being updated. 19 This extraordinary increase covered pensions equal to or less than 1.5 times the value of the monthly Social Support Indexer ( 631.98) and was 10 per month, in cases where they have not been subject to any rise between 2011 and 2015 and 6 per month in all other cases. 20 Lusa is a State-Owned enterprise and it s the only Portuguese news agency of national scope. Lusa s objective is that of collecting and treating news or informational material, producing and distributing news to a wide range of users (national and international media, companies and diverse institutions of a public and private nature) and providing to the Portuguese State a service of public interest related to the information of citizens. 21 In 2017, it was paid from August onwards. 8
2. Central Government and Social Security REVENUE In the opposite direction, it highlights the decrease in the number of active employment and vocational training measures supported by the Employment and Vocational Training Institute. Investment expenditure grew 5.7% (-2.5% until April), as a result of the increase in the execution of projects under the Portugal 2020 program 22, associated with public domain assets, by Infraestruturas de Portugal, S.A. 23 and the payments made to the Douro Litoral road concession. In the opposite direction, it should be emphasized the base effects in 2017 of the payment of compensation to Portucel Recicla by EDIA - Empresa de Desenvolvimento e Infraestruturas do Alqueva, S.A. 24, in the context of legal proceedings between the parties regarding an expropriation. Other expenditure decreased 27.6% (-23.2% until April), this variation being explained by two base effects in 2017, namely: i) The distribution, under the form of dividends to shareholders, of the amount of the 2016 profit of Sociedade Portuguesa de Empreendimentos, S.A. (SPE) 25 ; and ii) The payment of the Corporation Income Tax by the Infraestruturas de Portugal, S.A. 26 27. Central Government and Social Security revenue decreased by 2.6% until, with emphasis on the unfavourable behaviour of the tax revenue (-4.8 p.p., corresponding to -8.5%), despite the increase in the contributory revenue (+1.3 p.p., corresponding to +4.9%) and in the non-tax and non-contributory revenue (0.9 p.p., corresponding to +5.2%). Tax revenue evolution (-8.5%) was the result of the contraction of direct taxes (-31.6%), despite the increase in indirect taxes (+4.7%). Direct taxes reduction was justified by the evolution of the Corporation Income Tax (CIT) revenue (-73.6%) owing to the fact that, by means of changes in the deadline for delivering the 2017 tax statements, the corresponding revenue will only be received in June 2018 28 - and of the Personal Income Tax (PIT) revenue (-7%), influenced by the different profile of the PIT reimbursements, not yet fully compensated. The increase in indirect taxes revenue was due to the behavior of the Value-Added Tax (+5.2%), the Tobacco Tax (+8.9%), the Stamp Tax (+4.9%) and the Tax on oil and energy products (+2.2%). 22 Portugal 2020 is the partnership agreement between Portugal and the European Commission, which brings together the five Europ ean Structural and Investment Funds - European Regional Development Fund, Cohesion Fund, European Social Fund, European Agricultural Fund for Rural Development and European Maritime and Fisheries Fund and which defines the principles that set out the economic, social and territorial development policy to promote in Portugal, between 2014 and 2020. 23 Public corporation responsible for constructing, operating, rehabilitating, extending and modernizing the road and rail netwo rks. 24 EDIA is the company for the development and infrastructures of Alqueva's Dam. 25 The Sociedade Portuguesa de Empreendimentos (SPE) is a state-owned company, owned in 81.1% by the public holding PARPUBLICA, which purpose was the exploitation of diamonds in Angola. After establishing an agreement with the Angolan corporation Endiama, the SPE has ceded its participation in an Angolan company in that area, so that after the distribution of dividends, it was extinguished. 26 Infraestruturas de Portugal, S.A. is the Portuguese Company for the Management of Road and Rail Infrastructures. It is at stake the payment of the tax, in May 2017. 27 In 2018, it will be paid in June. 28 Usually received in May. 9
2. Central Government and Social Security The Social Security systems contributions change rate (+4.9%) was due to the increase in contributions received by the Social Security (+6.7%), mainly reflecting the improvement in the macroeconomic scenario growth of GDP and of the employment level -, the greater efficiency in combating fraud, the increased efficiency in the control of employers remuneration statements and the rise of the monthly minimum guaranteed remuneration. On its turn, contributions received by the CGA 29 registered a decrease (-2.5%), influenced by: i) The fact that the legal period for the delivery of contributions by public employers runs until the 15 th of the month following the month to which they concern; ii) The change in the form of payment of the Christmas bonus 30 ; and iii) The reduction of the subscribers number (for retirement, death or other reasons). The non-tax and non-contributory revenue increased 5.2%. This evolution was driven by the growth of fees, fines and other penalties (+8.9%), property income (+10.5%), transfers from the European Union (+6.9%) and sale of current goods and services (+4.7%). The evolution of fines, fees and other penalties mainly reflected the reclassification of the levy on insurance premiums (50.2 million euros) by INEM - Instituto Nacional de Emergência Médica, I.P. 31 32, aiming at the standardization of accounting (in 2017, this amount was accounted for as indirect taxes). Regarding the property income, influenced by the delivery of dividends by the Bank of Portugal, in the amount of 414.9 million euros (net of Corporate Income Tax), which registered an increase of 136.4 million euros (+49%) compared to the amount delivered in 2017. The increase in transfers from the EU was justified by the amounts of the European Social Fund recorded by the Social Security (+38.1%), associated with the stabilization of the Portugal 2020 program 33 operationalization, with a significant increase in operations in execution, namely within the scope of the operational programs Social Inclusion and Employment and Human Capital. Sales of current goods and services growth was influenced by revenues from the Environmental Fund 34, with an increase of 36.2 million euros from auctions under the European Union Emissions Trading System. 29 Caixa Geral de Aposentações (CGA) is the public body that administrates the Portuguese civil servants pension scheme. However, from 2006 onwards, the new civil servants became part of the general social security scheme, so that the pension system managed by CGA has been closed since that year. 30 Which, in 2017, by virtue of the law, was paid by 50% in November and the remaining 50% in twelfths throughout the year. 31 The National Institute of Medical Emergencies. 32 INEM is a public institute, to which is attributed all the emergency activity, namely the pre-hospital emergency system, transportation, hospital reception, among others. The INEM rate is levied on life, health, personal injury and car insurance premiums and represents almost the entire INEM budget. 33 Portugal 2020 is the partnership agreement between Portugal and the European Commission, which brings together the five Europ ean Structural and Investment Funds - European Regional Development Fund, Cohesion Fund, European Social Fund, European Agricultural Fund for Rural Development and European Maritime and Fisheries Fund and which defines the principles that set out the economic, social and territorial development policy to promote in Portugal, between 2014 and 2020. 34 The Environmental Fund aims to support environmental policies to achieving the goals of sustainable development, contributing to the fulfillment of objectives and national and international commitments, particularly those relating to climate change, water resources, waste and nature conservation and biodiversity. 10
2. Central Government and Social Security It should also be noted that Rádio e Televisão de Portugal, S.A. 35 sales increased by 17.1 million euros due to debts recovery (9.9 million euros) and funds related to EUROVISION (3.9 million euros). 35 RTP, the Portuguese public broadcaster. 11