The European Commission is not at all happy with Portugal’s draft State Budget for 2016 despite the figures predicting an enviable reduction in the country’s deficit.
The Ministry of Finance has received a stiff letter from European commissioners Pierre Moscovici and Valdis Dombrovskis asking "why Portugal plans a reduction in the structural deficit for 2016 that is well below the figure recommended by the European Council last July?"
The optimistic 2016 draft State Budget predicts a reduction in the country’s structural deficit to 1.1% of GDP, down from 1.3% in 2015.
The sniffy missive adds that under a 2013 regulation, if the commission finds there has been a serious disregard for the Stability and Growth Pact it must recommend the government sends in a re-draft for approval, or at least explain in detail the reasoning behind the earlier figures.
Portugal’s Prime Minister António Costa said today in The Hague that there is "no serious problem" between the government and Brussels over the State Budget for 2016, noting that at the moment the 2016 Budget discussions are “at the technical level.”
The commissioners also want to get this matter sorted out, stating that they "want to continue a constructive dialogue with Portugal with the aim of a joint understanding."
The Prime Minster said that he spoke with his Minister of Finance, Mario Centeno, who confirmed that the European Commission's team is in Lisbon working with the Ministry of Finance and that he will await the outcome.
Costa insisted that "the technical issues are currently being addressed between the Ministry of Finance services and the Commission" and that he was unaware of any problems with his budget draft submitted to Brussels.
"The only thing we know is that a letter has been sent by the Commission urging a technical evaluation, and the teams have been working since this morning to clear up everything by Friday," said Costa whose relaxation of many of the auterity measures put in place to appease Brussels and the Troika of lenders has triggered concern in the ranks of grey suits that now run Portugal's finances.
Comments
The big 3 ratings agencies have now lined up to cast doubt over the currently proposed Portuguese 2016 budget. Given their suspicions - if they downgrade Portugal yet further it will soon approach Greek borrowing rates. Around 9.8 today. Unsustainable.