Portugal's 2014 budget deficit rises sharply after loan to troubled bank is included

LISBON, Portugal – Portugal's statistics agency has revised sharply upward the country's 2014 budget deficit, from 4.5 percent to 7.2 percent, after the Treasury failed to recoup a loan it made to a bank.

The government placed 4.9 billion euros ($5.5 billion) in a bank resolution fund — a mechanism adopted during the eurozone debt crisis to support the financial sector — that kept Novo Banco afloat. Novo Banco was the so-called good bank salvaged from last year's collapse of major lender Banco Espirito Santo.

The Bank of Portugal announced this month it had failed to find a buyer for Novo Banco willing to pay the sale price, which aimed to cover public liabilities.

The National Statistics Agency added the Treasury outlay to the deficit Wednesday.