EC requires Portugal to adopt additional measures to contain fiscal deficit

4 July 2016

The European Commission is expected to give Portugal three weeks to adopt measures to correct the budget deficit in order to avoid sanctions for breaching agreed deficit levels, Portuguese newspaper Observador reported.

The three-week period will begin when the college of commissioners makes the decision. This is expected to happen on Tuesday if Ecofin (27 EU ministers) concludes that Portugal (and Spain) has not taken effective measures.

The agreement would satisfy the most conservative countries in this process, such as Germany, the Netherlands and Austria, which since 9 February, shortly after approval of the Portuguese budget in Brussels, have asked for Portugal to implement a plan B of further measures to be applied this year.

However, Portugal’s economy is expected to grow 1 percent this year, requiring additional measures to achieve the budget deficit of 2.2 percent forecast by the government, the International Monetary Fund (IMF) said in a statement issued Thursday in Washington.

The statement added that in the absence of additional measures to contain public spending, the budget deficit in 2016 should be around 3 percent, the maximum figure set out in the Maastricht Treaty. (macauhub/PT)