Brussels, 11/02/2016 (Agence Europe) - The Eurogroup took the view that the draft 2016 budget of Portugal runs the risk of not complying with the rules of the Stability and Growth Pact, in a statement it adopted on Thursday 11 February.
“We agree with the assessment of the European Commission. There still remains a risk of non-compliance (with the Pact)”, said the head of the Eurogroup, Jeroen Dijsselbloem. “We welcomed the commitment of the Portuguese authorities to prepare upfront additional measures to be applied where necessary and aiming to ensure that the budget is compliant with the Stability and Growth Pact”, he added, explaining that the Eurogroup will return to this dossier in May. It works on the basis of the results of the recent post-financial bailout monitoring mission, which flagged up macro-economic imbalances which are weighing down Portugal's recovery, and which calls for initiatives to liberalise the markets for products and services.
The commissioner for economic and financial affairs, Pierre Moscovici, advised the Portuguese authorities to “take any further measure that may be necessary to ensure conformity with the Stability Pact” in order to “boost productivity”. “This is the only way to restore confidence”, he said, adding: “the most important thing today was that we showed determination to respect the Pact”.
The European Commission's assessment showed that the Portuguese draft budget carries a risk of non-compliance with the rules of the Stability and Growth Pact (see EUROPE 11484).
Portugal is well aware of the danger of giving the impression that it is trying to move away from the budgetary trajectory laid down, said the German finance minister, Wolfgang Schäuble, upon his arrival at the Eurogroup. “That would be dangerous for Portugal”.
On Thursday, the risk premium on Portuguese debt securities had increased, a sure sign that investors are getting nervous about Portugal's state of health as a convalescent member of the eurozone, against a backdrop of renewed tensions over financial markets which focus largely on banking shares. (Original version in French by Mathieu Bion)