Page 74 - Economic report 2018

In parallel, an increase was seen in social contributions in 2018 (5.6%), driven by job creation
and wage momentum. In contrast, taxes on production and imports fell 1.3% in comparison with
2017, greatly influenced by falling revenue from VAT (IGI).

Below, we analyse the performance of the public sector in 2018, broken down by level
of government.

1. Central Government

In 2018, the Government closed the accounts with a non-financial deficit of 2.2 million
euros, a figure that represents 0.1% of GDP, according to provisional settlement data. This
negative balance contrasts with the surpluses seen in the two preceding years and can be
explained by a rise in expenditure (4.9%) that was greater than in income (2.1%). Accordingly,
the Government resumes the historical tendency to settle budgets with a deficit. So, in the
period from 1998 to 2018, there were eighteen financial years that closed with a deficit
and only three with a surplus.

Moreover, if the financial transactions carried The Government closed the 2018
out over the year are added to this non-financial financial year with a deficit, after
deficit of 2018, a more negative budget result
is obtained, of 4.7 million euros, although this two years of surplus.
is lower than that of 2017 (5.1 million euros).
Looking at the detail of these financial transactions, the most notable movements relate to two
debt transactions carried out in April and October, intended to renew issuances that matured
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in 2018 (for a total of 225 million euros in bonds). Moreover, the available balance of the loan
policies was reduced from 50 to 21 million euros.

GOVERNMENT BUDGET EXECUTION - Millions of euros
Chart 8.4

The Andorran economy: general developments | VIII. The public sector

Non-financial revenue Non-financial expenditure Cash balance
Source: Ministry of Finance.

The global debt of the central As a whole, the global debt of the central
Government shrank for the second Government shrank for the second consecutive
year, after a 15-year uninterrupted period of
consecutive year. growth, to reach 904 million euros, 0.9% less
than in 2017 and approximately the same
amount as in 2015. In the structure of this debt is notably the increase in the outstanding
balance of public debt to 795 million euros (the rest are loans and policies), more than triple