DREM releases, for the first time, data from Government expenditure Statistics  

The Regional Directorate of Statistics of Madeira (DREM) releases today, for the first time, data regarding the government expenditure of the Regional Administration of Madeira for the period 2016 to 2020, with reference to benchmark year of 2016 of the Portuguese National Accounts. This information is in line with the General Government Accounts corresponding to the 2^nd notification of 2021 on the Excessive Deficit Procedure released at the end of September. The data for the period 2016 to 2019 are final and those for 2020 are provisional.

The conceptual framework of government expenditure statistics and the adopted terminology are based on the European System of Accounts (ESA 2010) and the Manual on sources and methods for the compilation of statistics on the classification of government expenditure by function.

Total government expenditure - Government expenditure of the Regional Government of Madeira represented more than one-third of the Gross Domestic Product (GDP) of the Region in 2020

In 2020, the nominal value of the government expenditure of the Regional Government of Madeira (RGM) reached 1,502.9 million euros, representing 33.7 % of GDP (+4.7 percentage points than in 2019) and increasing by 1.3% compared to the previous year. In the country, the share of government expenditure to GDP was 48.4 % (+5.9 pp), growing by 7.8 % compared to 2019.

This gap between the share of the government expenditure in the RGM and in general government is explained by the fact that the areas of State intervention are broader. For example, in Defence, the Region plays no role and in the Public Safety and Order, only civil protection is under the jurisdiction of the RGM, unlike the courts, police and prisons.

The increase observed in 2020 in the ratio of government expenditure to GDP, is explained by the rise in expenditure in nominal terms and by the strong contraction of GDP, by more than 660 million euros between 2019 and 2020, due to the COVID-19 pandemic. It should be recalled that, according to the latest Regional Accounts released by Statistics Portugal (INE), the GDP of the RGM, in 2020, declined by 14.3% in real terms. It should also be noted that, in this year, the measures of prevention, containment, mitigation and recovery in the context of the COVID-19 pandemic had an impact of 126.1 million euros on expenditure.

Economic Classification of Expenditure - In 2020, the compensation of employees represented 42.8% of the government expenditure of the Regional Government of Madeira

Considering the economic classification of government expenditure, the three more important expenditure items are compensation of employees, social benefits and intermediate consumption, which represented 14.4%, 6.0% and 5.8% of GDP, respectively, in 2020. In the same order, the share in total expenditure was 42.8%, 17.8% and 17.2%.

In 2020, expenditure on compensation of employees reached a total value of 642.8 million euros (+6.4% compared to 2019).

In the same period, social benefits grew by 1.2%.

Intermediate consumption, in 2020, reached the value of 257.7 million Euros, showing a decrease of 10.1% compared to the previous year.  

RGM's investment represented 2.6% of GDP in 2020, amounting to 117.6 million euros, while interest on debt had, in the same year, a share in GDP of 1.6%. RGM paid around 73.5 million euros in interest on its debt in 2020, down by 8.0 million euros (-9.8%) compared to 2019.

Functional classification of expenditure - Education and Health are the functions with the greatest share of expenditure

In addition to the economic classification, government expenditure can also be classified by functions (COFOG), which are described in the methodological note at the end of this document. The functional classification adopted here is that recommended by the ESA 2010. This classification complements the economic classification, providing information on the purposes of the government expenditure, thus broadening the analytical framework for assessing its quality.

In government expenditure, the functions with the highest share of GDP in 2020 were education and health (8.1% in both categories), followed by the functions of economic affairs, general public services (where the interest paid is included) and social protection, with GDP shares of 6.7%, 4.4% and 3.5%, respectively. In total expenditure, the shares of education and health were 24.0% and 23.9%, in the same order. Economic affairs, general public services and social protection accounted for 19.8%, 13.0% and 10.3% of the total expenditure.

Analysing the expenditure by main functions there were increases between 2019 and 2020 in social protection (+5.3%), education (+4.1%) and health (+3.5%). On the opposite side, economic affairs (-3.8%) and general public services (-1.0%) recorded declines.

The changes in interest paid over the period reflect mainly the different interest rates recorded. The data show that the share of RGM gross debt and interest paid in GDP decreased between 2016 and 2019. However, in 2020, due to the contraction of a bond loan of 458 million euros to support policies to fight COVID-19, the share of gross debt to GDP grew to 114.5%.

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