Portugal’s Finance Minister, Mario Centeno, has been sent back to the drawing board to devise additional ‘just in case’ financial measures to keep Brussels happy, the so-called 'Plan B'.
The Eurogroup, made up of Europe’s finance ministers, said today that Portugal has been told to prepare additional measures, to be implemented "as needed" to ensure the 2016 State Budget is in line with the Stability and Growth Pact.
The Eurogroup statement today read that in the case of Portugal, it "reconfirms" its position of February 11th regarding a probable credit default by Portugal that would see the country's economic status and performance way outside the rules of the Stability Pact.
The government was told to prepare additional measures as a condition by Brussels of approving the 2016 Budget, which it did but with reservations. Measures include raising taxes, delaying tax drops and reducing government expenditure.
"Following the February 11th statement, we were informed that additional measures were being prepared, and that these measures will be implemented as needed to ensure that the 2016 State Budget will comply with the Stability and Growth Pact", reads today’s statement from Brussels.
But the European Commissioner Pierre Moscovici made it clear that he expects Plan B to be put into action now, "It means that these measures must be implemented." This is not the prime minister's interpretation of today's statement; "if necessary" means just that and Moscovici's insistence that Plan B must be started was met with a firm rebuttal.
"We will do homework that is required for an eventuality ... it may be necessary to adopt other measures but they will only be adopted if and when necessary and at this time we have no reason, I repeat, to think that they will be needed," said PM António Costa.
The Eurogroup also said that it will be back on Portugal’s case in the spring if last year’s figures are worse than budgeted, which they will be due to the Banif bailout.
In February, the Eurogroup gave the green light to the Portugal’s 2016 State Budget which was late due a change of government, but agreed with the European Commission’s view that there is a risk of default by Portugal and was unhappy that Portugal's workers on the minimum wage had been awarded a rise, criticising this move as one that would make Portugal 'uncompetitive.'
Finance Minister, Mario Centeno, assured his European partners that the Government would prepare additional measures, but said he was convinced that none of them would be needed, so convince is he that the 2016 State Budget targets are achievable.
