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Portugal's public deficit widens as pandemic bites

LISBON, Sept 25 (Reuters) - Portugal’s government reported on Friday a public deficit of around 6.1 billion euros between January and August this year, over 16 times higher compared to the same period in 2019 due to the impact of the coronavirus pandemic.

Total revenues fell 6.6% and tax revenues dropped 7.8% as a consequence of a contraction of economic activity, the finance ministry said in a statement, adding expenditures grew 4.9% due to, among other things, subsidies for unemployed and ill people.

“Budget execution highlights the effects of the COVID-19 pandemic on the economy and public services following the adoption of mitigation policy measures,” the ministry said.

Portugal, which has about 72,000 confirmed cases of the coronavirus and 1,936 deaths, is expected to suffer a 9.5% blow to its economy this year, after growth of 2.2% in 2019.

The country’s budget deficit soared to 10.5% of gross domestic product in the second quarter of 2020, official data from the National Statistics Institute showed earlier this week.

INE said the country expected a budget deficit of 7% of GDP in 2020 as a whole compared with a surplus of 0.1% last year, which was the first in more than four decades of Portuguese democracy. (Reporting by Patricia Vicente Rua, Writing by Catarina Demony, Editing by Kirsten Donovan)