Brussels, 20/07/2005 (Agence Europe) - On Wednesday, the European Commission adopted an opinion noting the existence of excessive deficit in Portugal, as well as recommendations calling on the Ecofin Council, to which the dossier will be referred on Tuesday 11 October in Luxembourg, to allow Portugal three years in which to bring its deficit down below the 3% of GDP mark fixed by the Stability and Growth Pact (EUROPE 8994). Also, Portugal should put an end to the deterioration of its public debt, which has breached the 60% of GDP Treaty reference value since 2003. If the recommendations are adopted by the EU Member State finance ministers, Portugal will thus, after Italy (EUROPE 8989), become the second country in excessive deficit to have more time allowed to it for correcting the situation thanks to the revised procedures of the Stability and Growth Pact.
The opinion forwarded by the Economic and Financial Committee (EFC) confirmed the elements contained in the report adopted on 23 June by the Commission (EUROPE 8975), namely: general government deficit of 6.2% of GDP in 2005 and well above 3% until 2007, and a public debate that has increased over recent years (over 60% of GDP in 2003, 61.9% in 2004 with further increases until 2007).
The Commission suggests that the Council should take the decisions needed to compel Portugal to reduce its structural deficit by around 1.5% in 2006, then by 0.75% in 2007 and in 2008. It is recommended that Portugal rigorously apply the correcting measures announced in order to limit the public deficit of 2005 to 6.2% of GDP. To achieve these targets, the Commission recommends that Portuguese authorities: - rapidly implement reforms allowing for budgetary expenditure to be controlled and reduced; - continue budgetary improvements; - and, if necessary, be ready to finalise additional measures to keep to the deadline of 2008 at the very latest.
The Portuguese authorities are invited to sustainably reduce the level of government debt in the country, so that it will come as close as possible to the reference value (60% of GDP). In this context, Portugal should also, the Commission says, evaluate and closely monitor the factors that contribute to a rise in debt levels, such as public investment (in infrastructure). Finally, Portugal is invited to keep improving the collection and processing of general government data and to pursue budgetary consolidation at a rapid pace in the years after 2008 to attain a budgetary position of close-to-balance or in surplus.
In line with Article 104, paragraphs 6 and 7 respectively, the Commission therefore recommends that the Council reach the conclusion that excessive deficit does exist in Portugal, and that it formulate recommendations inviting the country to take measures necessary to remedy the situation by 2008 at the latest.
As for Italy (EUROPE 8980) and according to the new procedures of the Stability Pact, the Commission took account within the time allowed of the importance of the adjustment requested and of the low economic growth this year, as well as the early diagnosis of deficit, said Amelia Torres, spokesperson for European Economic and Monetary Affairs Commissioner Joaquin Almunia.