European Commission warns Centeno to reduce structural deficit “below recommended” level

The European Commission has sent a letter to Portugal asking the Finance Minister to present an outline of the revised 2020 state budget “as soon as possible” that complies with European budgetary rules. Without new measures to allow the structural deficit to be reduced by at least 0.5% of GDP – as predicted by the government in Brussels last week – Portugal is in danger of having its budget failed by the European Commission.

Last week, to comply with the European Semester calendar under which all Eurozone countries have until October 15 to send their proposed State Budget for the following year, the Portuguese government sent a ‘light’ version of what will be the next State Budget. In this case, Mário Centeno chose only to review the economic forecasts taking into account developments in the international environment and the review carried out by the National Institute of Statistics.

Any measures included in the next State Budget for 2020, including those already foreseen in the Stability Programme presented in April of this year, were left out.

However, after analysing the data sent by the Portuguese Government, the European Commission sent a letter to Portugal – as it did to Belgium, Finland, France, Italy and Spain – where it demands an update of this document “as soon as possible”, since the expected budgetary results fall short of what the country is obliged to under the European budgetary rules.