sábado, 6 de fevereiro de 2016
Portugal’s budget clears EU hurdle
“That the new government can ruin the hard-won reform achievements of the previous government is a joke.”
Portugal’s budget clears EU hurdle
Commission gives green light to government’s plan, despite warning on eurozone non-compliance.
By PAUL AMES 2/5/16, 5:48 PM CET Updated 2/6/16, 6:10 AM CET
LISBON — Portugal’s Socialist government avoided an embarrassing rejection of its 2016 budget by the European Commission Friday after its additional deficit-reducing measures eased some of Brussels’ concerns.
“The Commission did not have to request a revised budgetary plan,” said Valdis Dombrovskis, Commission vice-president for the euro.
However, Dombrovskis warned the budget plan remains “at risk of non-compliance” with the eurozone’s stability and growth pact, asked the government in Lisbon to take “additional measures” and told them they will face an additional review by the Commission in the spring.
“We need to remain very attentive,” Dombrovskis told a news conference in Brussels. “We cannot be certain that the Portuguese budget plan offers enough reassurance to correct the excessive deficit in 2016, and government debt is still very high at nearly 130 percent of GDP.”
Despite the warning, the decision is a relief for Prime Minister António Costa, who is struggling to balance eurozone deficit reduction commitments with pledges to roll back austerity measures introduced by the center-right government he ousted after elections in October.
The Portuguese budget plan aimed to reduce the deficit to 2.6 percent of gross domestic product this year.
The Commission last week warned the draft 2016 budget — which includes increases in pensions and public sector salaries — risks “particularly serious non-compliance” with eurozone deficit-reduction obligations. It also contested the government’s numbers, suggesting they are based on over-optimistic growth forecasts.
That had raised concerns Portugal could become the first eurozone government to have its budget rejected by the Commission under “two-pack” rules introduced in 2013 to ensure coordination of budgetary policy among countries in the currency bloc.
During intense negotiations over the past few days, Portugal agreed to further deficit-cutting measures including through additional taxes on bank transactions, fuel and tobacco.
Pierre Moscovici, the EU economic and financial affairs commissioner, said the concessions from Lisbon had led to “additional measures worth up to €845 million, which will help safeguard the soundness of Portugal’s public finances.”
That should send a reassuring message to investors, Moscovici told the news conference in Brussels. “At the same time, the risk of non-compliance remains and we will continue to monitor developments in the coming months,” he added.
Portugal is not off the hook, however. Costa still has to convince markets that his government remains committed to sound finances and reforms to boost competitiveness despite his pledge to turn the page on austerity in line with agreements he struck with left-wing parties in return for parliamentary support that keeps his government afloat.
“We have presented a responsible budget, that will create conditions for employment, growth and social cohesion, with a more sustainable reduction of our deficit,” Costa told a news conference with Chancellor Angela Merkel in Berlin shortly before the Commission decision.
That the new government can ruin the hard-won reform achievements of the previous government is a joke.
The Portuguese budget plan aimed to reduce the deficit to 2.6 percent of gross domestic product this year, but that was based on the economy expanding by a healthy 2.1 percent. Forecasts from the Commission and International Monetary Fund this week show growth at just 1.6 percent.
Even with the rosy growth prediction, the budget seeks to reduce the structural deficit — which leaves out cyclical measures — by up to just 0.2 percent, rather than the 0.6 percent eurozone target.
Merkel was noncommittal in her comments on the Portuguese budget, but members of her center-right Christian Democratic Union party were quick to denounce what they see as the Commission going soft on rules designed to underpin the stability of the euro and prevent repeats of the crisis that rocked the currency after 2009.
“That the new government can ruin the hard-won reform achievements of the previous government is a joke,” said Herbert Reul, chairman of the CDU group in the European Parliament. “The Commission must restore its credibility as a guardian of the treaties. Otherwise we risk falling back into the darkest time of the euro crisis.”
Hans von der Burchard contributed to this article.