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EU approves Portugal’s budget, drops plans to cut funding

The European Union has given the green light to Portugal’s 2017 State Budget though it has warned that it risks violating the union’s spending rules.

It also confirmed that it will not suspend EU funds for Portugal and Spain next year following their breach of budget rules.

The news came on Wednesday (November 16) and delighted Prime Minister António Costa who told journalists that the announcement will give the Portuguese more hope for the future.

“Families can start looking at their day-to-day life with more tranquillity, without worrying about more cuts or tax hikes,” he said.

“Companies can also look at their financing options with more confidence and the country can look at its relations with European institutions with more serenity,” the prime minister added.

Costa pointed out that the “best guarantee that 2017 will go well” is to compare it to 2016.

“Last year the EU did not approve the budget, which had to be changed in Parliament.”

Though the news is undeniably positive for the country, it does not mean the EU won’t keep Portugal on a short leash.

Brussels still worries that the budget could violate the union’s spending rules, though the risk of this actually happening is not deemed very high.

It will also monitor Portugal’s deficit closely, making sure the country does everything it can to reduce it.

Cited by Reuters, European Commission vice president Valdis Dombrovskis said that though Spain and Portugal were found in breach of EU fiscal rules last year, the Commission concluded “there is no need to sanction them as they have taken sufficient measures to correct their imbalances”.

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