14.04.2010 - The European Commission today examined the updated stability programme of Portugal.
According to Council Regulation (EC) No 1466/97 on the strengthening of budgetary surveillance and the surveillance and coordination of economic policies, Member States must submit updated macroeconomic and budgetary projections every year. Such updates are called stability programmes in the case of countries that have adopted the euro, and convergence programmes otherwise. This regulation is also referred to as the 'preventive arm' of the Stability and Growth Pact.
This year's assessments have to be seen against the background of the sharp economic and financial crisis which has had a major impact on public finances. Reflecting the working of automatic stabilisers and discretionary stimulus measures implemented in line with the European Economic Recovery Plan (EERP) to cope with the exceptional economic circumstances, a large majority of Member States is currently subject to the excessive deficit procedure following corresponding Council decisions in 2009.
This implies that the medium-term budgetary strategies of these countries have to be assessed against the background of the recommendations to correct their excessive deficits by the deadlines set by the Council.
In 2009, the general government deficit of Portugal exceeded the 3% of GDP reference value set in the Stability and Growth Pact by a significant margin. The programme foresees a reduction of the deficit to below the reference value by 2013.The growth assumption underlying the budgetary projections is assessed as rather optimistic, implying that budgetary outcomes might be worse than targeted.
Furthermore, the budgetary consolidation strategy is not sufficiently backed up by concrete measures.
Based on its assessment, the Commission has adopted recommendations for Council opinions on the programme which, together with recommendations for Council opinions on the programmes of twenty-four further countries, will be discussed at the forthcoming ECOFIN meeting on 16-17 April.
>> Press release IP/10/422 Commission
assesses Portuguese stability programme
>> Stability and convergence programmes (or updates): 2009-2010