Inflation and Energy Crisis Cost Portugal €1.65 Billion in July

Portugal’s government spending on measures to combat inflation and the energy crisis reached €1.65 billion in the first seven months of 2023, according to the latest budget execution report. The report highlights a decrease in effective revenue of €722.8 million and an increase in effective expenditure of €929 million in July. Key contributors to the revenue loss include a mechanism that reduces the Special Consumption Tax (ISP) rate to offset the VAT reduction to 13%, amounting to €429.5 million, and VAT refunds related to ISP, totaling €162 million. On the expenditure side, notable allocations include €566 million for the National Electricity System (SEN) to reduce tariffs, €185.3 million for extraordinary rent support, and €100.3 million for the Ukraine support program. This brings the total cost to €1.65 billion, up from €1.51 billion in June.