The European Commission considers that the Portuguese government's
2016 Draft Budgetary Plan is at risk of non-compliance with the
provisions of the Stability and Growth Pact. In its Opinion adopted
today, the Commission therefore invites the authorities to take the
necessary measures within the national budgetary process to ensure that
the 2016 budget will be compliant with the Stability and Growth Pact.
In
the context of elections on 4 October 2015, Portugal did not submit a
DBP on time by 15 October, but only on 22 January 2016. A preliminary
analysis identified a serious risk of non-compliance with budgetary
policy obligations and, in line with the rules, the Commission asked the
Portuguese government to clarify outstanding issues.
Taking into
account a) the Draft Budgetary Plan, b) further structural consolidation
measures announced by Portugal on 5 February as well as c) additional
information regarding the 2015 baseline, the structural effort planned
by the Portuguese authorities for 2016 is now estimated to be between
0.1% and 0.2% of GDP.
Vice-President Valdis Dombrovskis, responsible for the Euro and Social Dialogue, said: "Following
intense technical and political contacts, the Commission did not have
to request a revised draft budgetary plan from the Portuguese
authorities. Nevertheless, the government's plans are at risk of
non-compliance with the rules of the Stability and Growth Pact. The
Portuguese Government is invited to take the necessary steps to ensure
that the 2016 budget is compliant. In spring, the Commission will
reassess Portugal's compliance with its obligations under the Stability
and Growth Pact, including under the Excessive Deficit Procedure."
Pierre Moscovici, European Commissioner for Economic and Financial Affairs, Taxation and Customs, said:...
"This
is a good outcome for all concerned: Portugal, the Commission and the
euro area. Without having had to request a revised draft budgetary plan,
a constructive dialogue has led to additional measures worth up to €845
million, which will help safeguard the soundness of Portugal's public
finances. The reassuring message to investors today is: the EU's fiscal
framework is robust and the Commission welcomes Portugal's reaffirmed
commitment to it. At the same time, the risk of non-compliance remains
and we will continue to monitor developments in the coming months as
part of the ongoing Excessive Deficit Procedure."
Portugal
has been in the corrective arm of the Stability and Growth Pact since
December 2009 and was asked to correct its excessive deficit by 2015,
i.e. to bring the deficit to below 3% of GDP by 2015. For 2016, the
Council recommended that Portugal make a fiscal adjustment of 0.6% of GDP
towards the medium-term objective. According to Portugal's DBP and the
Commission's winter forecast, the general government deficit is expected
to have been 4.2% in 2015.
Background
Under the EU’s rules on fiscal policy coordination (the so-called Two-Pack),
euro area Member States not under economic adjustment programmes are
expected to submit their Draft Budgetary Plans by 15 October (Article 6
of Regulation (EU) No 473/2013). The Commission adopts its Opinions on
the Member States' plans by end-November.
In the context of
general elections on 4 October 2015, the Portuguese authorities did not
submit a Draft Budgetary Plan for 2016 by the deadline of 15 October.
The Commission urged the Portuguese authorities to submit the DBP as
soon as possible, which the Portuguese government did on 22 January 2016.
Portugal is currently subject to the corrective arm of the Stability and Growth Pact
(since December 2009) and was recommended to correct its excessive
deficit by 2015. It was therefore to become subject to the preventive
arm of the Pact and to the transitional debt rule as from 2016.
Therefore the Council recommended
that Portugal should achieve a structural effort of 0.6% of GDP in
2016. This constitutes the budgetary obligation against which the DBP
has been assessed.
