The draft has been lifted-off!

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[THIS IS THE THIRD AND FINAL PART OF A COMMENT ON THE PORTUGUESE ELECTIONS AFTERMATH. PLEASE CHECK OUT PART I AND PART II .]
by Sérgio Maia Tavares Marques, Jurist and 
student of the Master's degree in EU Law of UMinho

At last the Comission can examine the Portuguese Draft Budgetary Plan for 2016 and put an end to the “failure-not-failure” cul-de-sac we have been following for the past couple of months. Now the Brussels economic experts will look into the official document. Based on Regulation (EU) No 473/2013 (here), the Comission has up to 45 days (that normally would be between Oct., 15th to Nov., 30th, according to articles 6 and 7) to adopt an opinion on the Member State´s plan as well as an overall assessment of the budgetary situation and prospects in the euro area as a whole (2016 version here).

For countries subject to the preventive frame of the TSCG, this opinion considers the compliance with the Country-Specific Recomendations (CSRs) and the Medium-Term Objectives (MTO).

For Member States under the corrective Excessive Deficit Procedures (EDP), the Opinion on the budget plan takes EDP´s measures for public expenditures highly into account. Portugal is about to leave the EDP, which was designed to finish in 2015 – as long as it is not extended. Other Member States on EDP are France, the UK, Spain, Ireland, Croatia, Cyprus, Greece and Slovenia, with different deadlines for correction (respective drafts here).

If the Commission is not satisfied with the plan, it shall request a revised draft to be presented within 3 weeks at the longest. A new opinion over the second version shall be adopted within the same three weeks period.

So, to make sure the Euro economic policy is coordinated, the draft budgetary plans are graded as either compliant, partially compliant, or at risk of non-compliance.

The first cul-de-sac was not a failed road for Portugal. Out of prudence and strict lawfulness, it had better not enter a second one with the budget (here) now. It might not be a road as safe. At this point it all comes down to the merit of the measures, figures and spreadsheets presented in the document, such as the 126% public debt, the 2.6% deficit, the 2.1% growth and the 1.3% (GDP) expenditure reduction.

My selection of relevant inputs on the topic:

Context

Prime Minister Antonio Costa said Monday his executive would submit its draft budget for 2016 this Friday — three months after the deadline set up in the EU’s rulebook, Jornal de Negocios reported.

 

Centeno added that the financial intervention in the bank Banif at the end of 2015 is “making it difficult” for Portugal to exit the excessive deficit procedure this year — as had been forecast.

“I underline that this is the first time such a thing has happened. It is something we can understand given the complicated political situation, but it is also regrettable. We ask that the new Portuguese government sends us their plan as soon as they are in office”, Moscovici said.

Updates

Portuguese Prime Minister Antonio Costa is confident that Brussels will approve his 2016 draft budget, which will both cut the deficit and “turn the page on austerity” to boost economic growth with higher disposable incomes.

The budget deficit will be 2.6 percent of gross domestic product this year, narrower than a previous target of 2.8 percent and less than a 3 percent shortfall in 2015, according to the plan. 

Portugal PM will roll back austerity.

 

Picture credits: ‘Euros’ by JWPhotography2012.

We invite you to also read  PART I and  PART II of this article.

 

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