Brussels has formalized their opinion on the Portuguese 2018SB: there is a "great" risk of non-compliance with the budgetary commitments and countries need to take action.
The European Commission had given Portugal a double warning, this Wednesday: firstly, the country is risking a “significant deviation” in comparison to the rules of the Growth and Stability Pact of 2018; secondly, Portugal will be subject to a thorough evaluation because of the signs it is giving on macroeconomic imbalances. These warnings were made in Brussels, after the publication of the Autumn package and the beginning of the European Semester.
On October 27, there was an exchange of letters between the European Commissioner for Economic and Monetary Affairs, Pierre Moscovici, and the vice-president of the European Commission, Valdis Dombrovskis and the Portuguese Finance minister Mário Centeno, warning him against the possibility of the State Budget having “significant deviations” from European rulings. This Wednesday, the European Commission has formalized this opinion and concern over the Portuguese Government’ Budgetary Plan Drafts for 2018, requesting that the country takes the necessary measures to avoid a case of non-compliance.
“In five countries (Belgium, Italy, Austria, Portugal and Slovenia), the Budgetary Plan Drafts present a risk of non-compliance with the requirements for 2018, within the Growth and Stability Pact”, the Commission decided. “The Budgetary Plan Drafts of these member-States could result in a significant deviation of the adjustment path towards their medium-term goals”, the EC further stated.
"Today, we present our opinion on the Budgetary Plan Drafts and asks member-States who are at risk of non-compliance with the Growth and Stability Pact to take the necessary measures for adjusting their budgetary path. ”
In other words, this assessment means that Portugal is not making the necessary structural adjustment effort it needs in order to, at the required rhythm, grow close to the structural fiscal balance set as the medium-term goal (a 0.25% surplus).
In the press conference, the vice-President of the EC, Valdis Dombrovskis, made clear what the request for the countries mentioned was: “Today, we present our opinion on the Budgetary Plan Drafts and asks member-States who are at risk of non-compliance with the Growth and Stability Pact to take the necessary measures for adjusting their budgetary path”.
We are not in a crisis anymore, but we can never repeat the mistakes that got us there.
Later, when specifically asked about the Portuguese situation, both Dombrovskis and the European commissioner for Economic and Monetary Affairs reinforced the request. “We invite the authorities to take all the necessary measures”, stated Moscovici, adding that “We are not in a crisis anymore, but we can never repeat the mistakes that got us there.”