On a letter replying to the Commission's requests for clarifications, Portugal used the rating agency's compliments to justify the state budget. Portugal maintains the 0.3% deficit reduction target.
Portugal has already replied to the European Commission’s letter, sent last Friday, in which the director-general for Economic and Financial Affairs requested “clarifications on the compliance of Portugal’s planned fiscal effort in 2019 with the requirements of the preventive arm of the Stability and Growth Pact”.
The Commission also asked for explanations on the significant deviation from the recommended fiscal adjustment both in 2019 and over 2018 and 2019 together.
The letter was sent to Mr Mourinho Félix, Portuguese Deputy Finance Minister and Secretary of State for Finance, and it noted that the “planned structural effort in 2019 amounts to 0.3% of GDP at face value”, amounting to, according to the EC’s calculations, 0.2% of GDP, which is below the 0.6% of GDP required by the EU.
However, Nuno Brito, REPER’s ambassador, said that these calculations were in effect wrong, and noted that the Portuguese target is 0.3% of GDP and not 0.2% of GDP, as previously announced by the European Commission.
Replying to the Commission, Portugal also said that the “impacts of the continuation and broadening of the public expenditure review, has allowed for a continued structural budget consolidation over the last few years” and that the fiscal effort for 2019 “based on the structural balance follows an accumulated effort of 1.7 p.p. from 2016 to 2018”.