The Autonomous Region of the Azores’ accounts saw their overall balance worsen, reaching a deficit of 111.4 million euros (ME) in March of this year.

This negative difference between the revenue collected by the Public Administration and the expenditure recorded represents an increase of 70 ME compared to February, when the regional accounts had a budget deficit of 41 ME. The numbers are from the March 2025 Budget Execution Bulletin (BEO), which shows actual revenue of 344.8 ME and actual expenditure of 456.2 ME in the first three months of the year. The regional Government’s budget execution deficit reached 125 million euros, a 6% improvement on the same period in 2024 (-133 million euros). The revenue collected by the Regional Government in the first quarter of this year increased by 7.64% (to 327.5 ME) compared to 2024, at the expense of current revenue which reached 285.6 ME, almost 13% more than in the same quarter last year.

The biggest contribution to current revenue comes from tax revenue, which accounts for 72.9% (208 ME) of the total and increased by 8.8% compared to 2024. In this field, indirect taxes increased by almost 10% to 147 ME, while direct taxes rose by nearly 7% to 61 ME. Capital revenue, on the other hand, decreased significantly by 18.56% compared to 2024, standing at 41.8 ME in March this year, down from 51.4 ME last year. Despite revenues increasing by almost 8% in March, the Regional Government’s actual expenditure also increased by 3.48% to 452.6 ME, about 15 ME more than in 2024.

According to the March Budget Execution Bulletin, the increase in expenditure was due to capital expenditure, which rose by almost 20% to 147.5 ME compared to 123.8 ME in 2024, with special emphasis on the item capital goods acquisitions, which saw an increase of 18 ME this year. On the other hand, the Regional Government’s current expenditure fell by 2.72% compared to 2024, from 313 ME to 305 ME, mainly due to the reduction in current transfers (-12 ME).

Health, Education, and Transportation with the largest share of expenditures

The March 2025 Budget Execution Bulletin once again shows that Health, Education, and Transportation continue to consume the lion’s share (70.1%) of regional spending. According to the Regional Government’s document, the functional breakdown of expenditure shows that Health accounts for 131.5 ME, Education for 94.5 ME, and Transportation for 91.1 ME, which together account for 70.1% of total spending.

In March of this year, the Regional Secretariat for Health and Social Security, the Regional Secretariat for Tourism, Mobility and Infrastructures, and the Regional Secretariat for Education, Culture and Sport recorded the highest volume of expenditure, with 137.5 million euros, 108.8 million euros, and 96.6 million euros, respectively, accounting for 85.7% of the total.

VAT remains the tax with the highest revenue

Indirect taxes, especially value-added tax (VAT), continue to be the main contributors to revenue growth in the Azores.

According to the March Budget Execution Bulletin, indirect taxes increased by almost 10% compared to 2024, representing 146.9 ME and 70.6% of tax revenue. VAT stands out in the March accounts with an execution of 100.8 ME, representing 68.6% of these taxes. Direct taxes generated revenue of 61.3 ME, 19.5% of the budgeted amount. The IRS stands out among these taxes, with 58.7 ME collected and an execution of 24.5%, equivalent to 95.7% of direct taxes. Corporate income tax (IRC) was 3.5%, 16.4% more than in March last year.

Carolina Moreira is a journalist for the newspaper Açoriano Oriental, Paula Gouviea, director.

Translated to English as a community outreach program from the Portuguese Beyond Borders Institute (PBBI) and the Modern and Classical Languages and Literatures Department (MCLL) as part of Bruma Publication and ADMA (Azores-Diaspora Media Alliance) at California State University, Fresno, PBBI thanks Luso Financial for sponsoring NOVIDADES.