Latest draft budget 'at risk of non-compliance' with euro-zone rules

By TPN/Lusa, in News · 15-01-2020 12:15:00 · 0 Comments

The European Commission on Wednesday said that the latest budget plan for 2020 submitted by Portugal's government continues to present a "risk of non-compliance" with the euro zone’s Stability and Growth Pact, and called on the Socialist government to take the necessary corrective measures.

On 20 November, in its assessment of the first draft budget plan for 2020 submitted by the Portuguese authorities – which lacked detailed measures because the government had yet to be formed following the October general election – the European Union’s executive arm warned that that plan presented a "risk of significant deviation from the adjustment path towards the medium-term budgetary objective".

Now, in its written opinion on the updated plan submitted by Portugal on 17 December, the commission has reiterated the warning.

According to the EU executive, "the structural balance recalculated in the updated budgetary plan is close to the medium-term budgetary target in 2020, but the Commission projects a risk of deviation from the necessary adjustment with a view to the medium-term budgetary objective in 2019 and 2020.”

On the other hand, on the reduction of debt, which prompted warnings from the commission when it reviewed Portugal’s first draft budgetary plan, the EU executive now considers that, based on its projections, Portugal will make "sufficient progress" in terms of meeting debt reduction targets for both 2019 and 2020.

Noting that its projections in terms of growth in gross domestic product, consumer price inflation, and developments in the labour market are very close to those in the budgetary plan presented by the government in December, the commission takes the view that, overall, the macroeconomic scenario underlying the updated plan “appears plausible” for 2019 and 2020.

In the draft state budget for 2020 presented to the commission on 17 December, the government projects GDP growth of 1.9%, one tenth of a percentage point less than the forecast contained in the previous draft.

The commission, stressing that it is "also of the opinion that Portugal has made limited progress with regard to the structural part of the budgetary recommendations" presented by the European Council in July 2019, "asks the authorities to accelerate progress" in this area.

"A comprehensive assessment of progress made in terms of implementing country-specific recommendations will be made in the 2020 Country Report and in the context of country-specific recommendations the Commission will propose in spring 2020", it states.


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