The OECD’s secretary general has said Portugal's 2015 deficit numbers are just numbers and that the country deserves some sort of flexibility when assessing its performance against target.
Brussels should review the rules and make the figures a bit more fluid, these are not ‘magic numbers’, said José Ángel Gurría from the OECD in an interview with Jornal de Negócios, arguing that no one should be punished with fines and sanctions.
"It makes no sense for Portugal to be penalised because of a deviation of 0.2%," said José Ángel Gurría, Secretary-General of the OECD who added that instead, Brussels should review the rules so that the economy can be boosted through more public investment.
For Gurría, Portugal "is out of some very difficult circumstances, and is now trying to recover, having taken some politically tough decisions."
The European Commissioner Jeroen Dijsselbloem said today that Portugal and Spain have "unresolved budgetary issues" and concludes that both countries need to find solutions to their fiscal ‘slippage’ and that action is inevitable to bring the countries back into line.
Dijsselbloem did say that a 'zero fine' is a possibility but this would depend on the countries’ plans for tackling their public spending excesses, "The more they put on the table, the greater the commitment made to the Commission, perhaps this can help," added the hard-line Dutchman.
The European Commission concluded last Thursday that Portugal and Spain should be fined and should suffer some degree of punishment to ensure future compliance.
The Eurogroup meeting today was to to discuss Portugal and Spain and listen to any excuses and to plans for the future.
The decision to adopt existing recommendation for sanctions and fines will be taken on Tuesday July 12th at the Ecofin meeting of Europe’s 28 finance ministers.
If Ecofin had agreed 'no effective action' then the process would have returned to the European Commission. In fact today Ecofin decided that tomorrow it will "unanimously" approve the recommendations of the European Commission on the excessive deficit.
Jeroen Dijsselbloem said the eurozone countries will tomorrow vote in favor of Brussels penalising Portugal and Spain.
The President of the Eurogroup said the meeting this afternoon showed a "strong support to both the Commission's recommendations on the Excessive Deficit Procedure of the Iberian countries, which recorded budget deficits above 3% between 2013 and 2015."
France’s Finance Minister Michel Sapin said today that “Portugal does not deserve to be punished with sanctions” as it had made "a huge effort" and much the deficit excess was due to the collapse and mishandled sale of Banif that saw Portugal’s taxpayer saddled with a massive bill for the recapitalisation of the bank despite the business niot ebing owned by the State.
The support from France, in the aftermath of the football result, is a welcome development.
Portugal's Finance Minister, Mário Centeno, later said that he now is focused on obtaining a 'zero fine' result and is working on his explanation and plans for presentation.
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But the French, as we have seen for months now, are also against modernising and streamlining their own working practices. Although far ahead of their Club Med cousins.