EC recommends closure of excessive deficit procedure

By TPN/Lusa, in News · 22-05-2017 11:55:00 · 0 Comments

The European Commission decided on Monday to recommend the Economic and Financial Affairs Council (Ecofin) to close the Excessive Deficit Procedure (EDP) applied to Portugal since 2009.

The Commission’s decision was announced at the presentation of the European Spring Semester Package, through which Brussels will issues specific recommendations to each country after analysing national programmes for stability and reforms presented by each member state in April, and will implement measures as part of the Stability and Growth Pact.

The European Commission (EC) noted that Portugal had reduced its budget deficit to 2.l0% of gross domestic product (GDP) in 2016, which was lower than the 3.0% target set in the Stability and Growth Pact. The Commission said on 11 May it estimates that Portugal’s budget deficit will keep falling to 1.8% this year and 1.6% next year, and that conditions had been met to end the Excessive Deficit Procedure.

In its Spring forecasts the EC stated that “after being the equivalent of 2% of Gross Domestic Product (GDP) in 2016, the budget deficit is expected to remain below 2% on the projection horizon”.

The forecasts also show an improvement compared with the Winter forecasts, when Brussels estimated that the deficit would be 2% in 2017 and 2.2% in 2018, though the EC is still concerned with the impacts of the Caixa Geral de Depósitos (CGD) capitalisation operation.

As regards government debt, after having reached 130.5% of GDP in 2016, Brussels estimates a reduction to 128.5% of GDP this year and to 126.2% next year, meaning its forecasts are slightly less than those from the government, which are 127.9% and 124.2%, respectively.