Excessive deficit: Portugal stuck for another year at least

Secretary of State for Portugal’s budget João Leão has said it is still “not clear” whether Portugal will emerge this year from its classification as a country running with an excessive deficit. The process is dependent on two factors, he told reporters on Tuesday: what is the deficit of 2015 without Banif (meaning the billions incurred by the State in the banking ‘resolution’) and what it is with Banif.

Leão stressed that the country has to “concentrate, and the government in particular, in the execution of this (year’s) budget” but that he is confident that by 2017 Portugal will emerge from Europe’s excessive deficit procedure (PDE), particularly as “without Banif” it was almost on track to do so even this year.

As things stand, however, Banif’s resolution has cost the country almost as much as BES (which cost over €6 billion) and thus 2015’s deficit is likely to be 4.3% (excessive deficits are any that run over 3%).

Jornal de Negócios explains that countries mired with excessive deficits (around 12 so far) cannot take advantage of “rules of flexibility approved in January 2015 by the EC which allow member states to increase their short-term spending, both for investment and structural reforms”.

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