The Portuguese Budget for 2019 might put the Growth and Stability Pact at risk, the EC alerted this Wednesday. 5 countries are at risk that their Draft Budgetary Plans are non-compliant with EU goals.
The legislative body of the EU met this Wednesday to present their opinion on the draft budgets from all member states. The Portuguese State Budget for 2019 is putting the feasibility of the Growth and Stability Pact at risk, the European Commission alerted this Wednesday.
Given the recent developments in that context in Italy, as their deficit was planned to hit 2.4% of GDP, way above the EU’s recommended level, it was expected prior to the meetings that the Commission would be giving special attention to that country’s budget.
As for Portugal, the Commission is concerned about the “macroeconomic imbalances” which might take the country off track.
Five countries are at risk of DBP non-compliance: “Belgium, Slovenia, France, Portugal and Spain”, Dombrovskis said, noting that “they should take the necessary measures to ensure the 2019 budget will be compliant with the Pact”.
Today’s College meeting highlights
“We still have strong risks in Europe, there are many imbalances”, Moscovici said in the press conference held this Wednesday at the European Commission.
“However, the situation has never been as favourable as now…the growth will remain robust in Europe”, he continued, noting that the “scars of the crisis have not completely healed, but the growth we have experienced [in 2017] had a positive effect on investment, employment, on the majority of our citizens and in the majority of our member states”
“The last excessive deficit procedure for Spain should be closed in 2018; more than two thirds (13 out of 19) of EU budgets are deemed to be compliant, that is generally good news.”
“There are just five states at risk of non-compliance because they just can’t make the structural efforts for 2018 and 2019”, Moscovici added.
The commissioner also said that the EC’s “commitment to dialogue with Italy has been genuine, and it will always be”, however noting that “Italy is in a specific category of serious non-compliance, as the fiscal differences remain (…) There are macroeconomic imbalances that should be solved, while structural challenges remain”.
Moscovici also noted that the fiscal situation in two other countries remains very worrying: Romania and Hungary.
“Italy is not respecting the debt criteria…but also, this is not the opening of the Excessive Deficit Procedure (EDP) yet. It is now for the member states to deliberate. If they agree, then the commission will prepare the EDP”, he concluded regarding the Italian case.
In contrast, the Greek budget received appraisals after this Wednesday’s College meeting, with Moscovici noting that “today marks a very important milestone on the path I wished to see come about for many years – the return to normality for Greece in the Eurozone”, as the country has “put forward a package of measures, and it is our view that they are well-reasoned”.
On some of his final notes, Moscovici said that “the efforts undertaken by the Greeks are an important political lesson for the EU” as “all the constraints have born fruits in terms of public finances”.