Today, the College held an extraordinary meeting to discuss the Draft Budgetary Plan of Portugal and to decide on the next steps.
To put this into context, on 22 January, Portugal sent to the Commission a Draft Budgetary Plan for this year, and which has subsequently been assessed by DG ECFIN. This plan was clearly in breach of the rules of the Stability and Growth Pact.
Intense political and technical contacts have taken place in recent weeks to ensure that the Portuguese budgetary plans for the year ahead comply with the rules. As a result, the Commission did not have to request a revised draft budgetary plan from the Portuguese authorities.
To recall, last year, the Council recommended that Portugal achieves a structural effort of 0.6 % of GDP in 2016. Today, following the Portuguese government's latest commitments and updated fiscal data, the structural effort in 2016 is estimated at between 0.1 and 0.2% of GDP. This is a deviation of slightly below 0.5 % and therefore avoids a rejection of the budgetary plan.
Nevertheless, the Commission today concluded that the existing Draft Budgetary Plan is at risk of non-compliance with the rules of the Stability and Growth Pact. The Commission therefore invites the Portuguese authorities to take appropriate steps to ensure that its 2016 budget complies with the fiscal rules.
We need to remain very attentive:
- We cannot be certain that the Portuguese Budgetary Plan offers enough reassurance to correct the excessive deficit in 2016, and
- Government debt is stillvery high at nearly 130% of GDP.
In spring, the Commission will reassess Portugal's compliance with its obligations under the Stability and Growth Pact, including under the Excessive Deficit Procedure.
As our economic forecast confirmed yesterday, there are still risks ahead, and our economies have to be strong enough to withstand them.
Portugal has made major efforts to overcome the crisis and return to economic growth. It is important to build on this. This means continuing structural reforms to strengthen the economy and maintaining sound public finances.