Brussels will not suspend the funds, but warns for an excessive deficit for 2017

  • ECO News
  • 17 November 2016

The European Commission will not hold the funds in abeyance for Portugal. However, the college of commissioners identifies a “risk of non-compliance with the requirements” for the 2017 deficit.

The European Commission will not hold strutural funds in abeyance for Portugal (nor for Spain). The decision was made this Wednesday, by the college of commissioners. However, Brussels continues to identify “risks of non-compliance” in the Portuguese government’s budgetary plan for the deficit in 2017.

Having the strutural funds being held in abeyance was a risk from the moment the Council of the European Union decided Portugal had not made enough of an effort to comply with the fiscal targets for 2015, initiating a sanctions procedure. The financial penalties (that, by default, would be of 0.2% GDP) were cancelled in July, but the decision about the suspension of strutural funds was postponed until after the structured dialogue between the Commission and the European Parliament had taken place.

Following the presentation of the budgetary plans for 2017, the European Commission sent a letter to the Portuguese minister of Finance, asking for further information. In their first reading of the State Budget draft, the commissioners have identified a very “slight” effort in the deficit structural deviation that, at best, would reach 0.1 percentage points. The rules for the Stability and Growth Pact demand a structural deficit reduction of 0.6 points for Portugal.

Find here the press conference about the college of commissioners’ meeting.