Portugal ended 2024 with a budget surplus
In a recent analysis of the Public Administration sector's performance, it has been reported that there was a 0.9% increase in both expenditure and revenue during Q4 2024. However, the specific factors contributing to this growth, particularly in relation to taxes on income and assets, are not explicitly detailed in the data from Ghana.
According to the Quarterly National Accounts by Institutional Sector, the Public Administration and Defence sector actually contracted the most in Q4 2024 among sub-sectors in Ghana, suggesting a fiscal contraction rather than an increase in expenditure/revenue during that quarter. This discrepancy may be due to a different sectoral breakdown in the source.
However, similar government accounts, such as those from Malta in Q1 2025, provide some insights. In Malta, the revenue increase was mainly driven by current taxes on income and wealth, market output, social contributions, and taxes on production/imports. Expenditure increase was chiefly due to compensation of employees, social benefits, intermediate consumption, and current transfers payable.
The specific impact on current revenue, especially taxes on income and assets, was pronounced in Q1 2025 in Malta, with taxes on income and wealth contributing €212 million to revenue growth, indicating a direct effect of these taxes on government revenues.
In light of the absence of direct Ghana-specific detailed explanations, it can be inferred that the increase in both expenditure and revenue in the Public Administration sector likely stems from stronger tax collections on income and assets, which form part of current revenues. The growth in public administration spending and revenue is often linked to increased compensation of employees and social transfers, typical drivers of government expenditure.
The increase in revenue—especially current revenue from taxes on income and assets—indicates improved tax compliance or policy changes enhancing collections. Conversely, the decrease in taxes on income and assets in the Public Administration sector's revenue was due to the application of new IRS withholding tax tables.
It's worth noting that the balance of the Public Administration sector remained unchanged from the previous quarter in 2024. In the previous year, 2023, the Public Administration sector's balance as a percentage of GDP was 1.2%. In contrast, the balance of the Public Administration sector was 0.7% in the year ending in the 4th quarter of 2024.
In conclusion, while the specific factors contributing to the 0.9% increase in the Public Administration sector's expenditure and revenue in Q4 2024 are not explicitly detailed in the Ghanaian data, insights from similar government accounts suggest that this growth is primarily due to increased current taxes on income and wealth and compensation-related expenditures. The balance of the Public Administration sector, however, remained unchanged from the previous quarter in 2024.
Portugal's finance ministry released news indicating a potential increase in revenue for Q4 2025, with a focus on current taxes on income and wealth, similar to the trend observed in Malta's business sector during Q1 2025. This suggests that Portugal might also experience a growth in the Public Administration sector's expenditure, possibly driven by increased compensation of employees and social transfers.
