Portugal remains in the Excessive Deficit Procedure in 2015

30 December 2015

Portugal is expected this year to remain in the excessive deficit procedure due to the solution adopted to rescue beleaguered bank Banco Internacional do Funchal (Banif) involving the use of public funds, according to Portuguese financial daily Jornal de Negócios.

The newspaper said that according to the Ministry of Finance accounts Portugal’s public deficit in 2015 will be over 4 percent due to Banif. Without the Banif effect the deficit would remain below the 3 percent limit set by the Maastricht Treaty.

However, the fact that the Banif was an extraordinary event may mean that the European Union will not apply penalties to Portugal for an excessive deficit.

The Technical Unit of Budget Support (UTAO), which assists parliament, said the impact of the resolution of Banco Internacional do Funchal on the deficit will amount to 1.25 percent of gross domestic product, and that Portugal would continue in the excessive deficit procedure in 2016.

The previous government had announced that everything was “on its way” for the budget deficit to stay below 3 percent and the official forecast for this year was 2.7 percent, as published in April and restated in the September report of the National Statistics Institute. (macauhub/PT)