# EUR-Lex - 52014PC0055 - EN

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# 52014PC0055

**Proposal for a COUNCIL IMPLEMENTING DECISION amending Implementing Decision 2011/344/EU on granting Union financial assistance to Portugal /* COM/2014/055 final - 2014/0028 (NLE) */**

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EXPLANATORY MEMORANDUM

Upon a request
by Portugal, the Council granted financial assistance to Portugal on 17 May
2011 (Council Implementing Decision 2011/344/EU) in support of a strong economic reform programme aiming at restoring confidence, enabling the return of the economy to
sustainable growth, and safeguarding financial stability in Portugal, the euro
area and the EU.

In line with Article 3(10) of Decision
2011/344/EU, the Commission, together with the IMF and in liaison with the ECB,
has conducted the tenth review to assess the progress on the implementation of
the agreed measures as well as their effectiveness and economic and social
impact.

Taking into account the recent economic,
fiscal and financial developments and policy actions, the Commission considers
that some changes to the economic policy conditions underpinning the assistance
are necessary to secure the programme's objectives, as explained in the
recitals of the proposed amendments to the Council Implementing Decision.

2014/0028 (NLE)

Proposal for a

COUNCIL IMPLEMENTING DECISION

amending Implementing Decision 2011/344/EU
on granting Union financial assistance to Portugal

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty on the
Functioning of the European Union,

Having regard to Council Regulation (EU) No
407/2010 of 11 May 2010 establishing a European financial stabilisation
mechanism[1],
and in particular Article 3(2) thereof.

Having regard to the proposal from the
European Commission,

Whereas:

(1)       The
Council granted financial assistance to Portugal, at the latter's request, on 17 May 2011 by means of Council Implementing Decision 2011/344/EU[2]. Such financial
assistance was granted in support of a strong economic and financial reform
programme (the 'Programme') which aims to restore confidence, enable the return
of the economy to sustainable growth, and safeguard financial stability in Portugal, the euro area and the Union.

(2)       In
line with Article 3(10) of
Implementing Decision 2011/344/EU, the Commission, together with the International Monetary Fund (IMF) and in
liaison with the European Central
Bank (ECB), has conducted,
between 4 December and 16 December 2013, the tenth review of the Portuguese authorities' progress on the implementation of the agreed measures under the Programme.

(3)       Quarterly
GDP growth continued at positive rates in the third quarter of 2013 and the
short-run indicators point to the projected economic recovery. On an annual
basis, real GDP is still forecast to decline by 1,6% in 2013 but to move into positive territory in 2014 and 2015, with
growth of 0,8% and 1,5%, respectively. The labour market outlook
has improved as well but unemployment remains high, expected to peak at 16,8%
in 2014 and to progressively decrease thereafter. Downside risks to the
macroeconomic outlook remain, as the projected recovery crucially hinges on
positive trade and financial market developments, which also depend on the
broader European outlook.

(4)       Up
to November 2013 the government
cash deficit recorded an improvement of 0,25% of GDP (net of extraordinary factors) compared with the same
period of the preceding year, which resulted from revenue growth outpacing
expenditure growth. The acceleration of tax revenue growth reflects the
recovery of economic activity in recent months as well as improved efficiency
in the tax administration, especially in the fight against fraud. On the
expenditure side budget execution is overall in line with the targets of the
second supplementary budget.

(5)       The
general government deficit target of 5,5% of GDP (net of bank
recapitalisations) in 2013 is likely to be met and the deficit outcome may even be below the target. This results from
positive risks having materialised in the last months of the year while most
negative risks dissipated. In particular, tax
collection is expected to exceed the implicit targets in the second
supplementary budget. Moreover, the yield of the
one-off debt regularisation scheme for outstanding tax and social security
contributions launched at the end of 2013 was about 0,3% of GDP higher than
envisaged. The absorption of EU Funds is also expected to be better than
previously estimated. Furthermore, negative risks from the Public-Private
Partnerships' renegotiations have been mitigated. Some negative risks nevertheless
persist, notably lower-than-projected  revenue from property taxes while
overruns on specific expenditure items, particularly personnel costs,
intermediate consumption and pensions benefits cannot be excluded.

(6)       The
2014 State Budget and other supporting legislation are consistent with a
deficit target of 4% of GDP in 2014. In order to reach the target consolidation
measures amounting to about 2,3% of GDP are being implemented, which also cover
for budgetary pressures and the need to rebuild the provisional
budget allocation for 2014. The measures are primarily
of a permanent nature and rely predominantly on expenditure savings.            
Most of the consolidation in 2014 — about 1,8% of GDP — draws on the public expenditure review, which was carried out over the
past year with the objective of increasing equity and efficiency in the
provision of social transfers and public services. The main public expenditure review measures will be implemented along
three principal axes:

(a) 
limiting outlays on the public wage bill by reducing the size of the public-sector work force while changing its composition towards
higher-skilled employees, notably through a
requalification programme and a voluntary redundancy scheme; further
convergence of public and private sector work rules and the revision of the wage scale as well as the streamlining of wage supplements; increase
of beneficiaries' contributions to the special public health insurance schemes,
aiming at the self-financing of these systems;

(b) 
limiting the public pension expenditure, given
the need to reassess its sustainability on the back of demographic
developments, while at the same time protecting the lowest pensions, by
increasing the statutory retirement age via changes to the sustainability
factor; recalibrating the 'extraordinary solidarity contribution', by lowering the
minimum threshold for the application of the progressive rate as well as the
thresholds for the application of higher rates; streamlining survivors'
pensions of both CGA and the general pension regime; reducing lifelong pensions
to politicians;

(c) 
savings in intermediate consumption and
expenditure programmes across line ministries.

(7)       Further
smaller-yield permanent revenue measures amounting to 0,4% of GDP, aiming to
further improve the efficiency and
equity of the current tax and
benefit structure, complement the public-expenditure-review package with a view
to achieving the 4% of GDP deficit
target. Moreover, a number of one-off measures totalling 0,2%
of GDP will be implemented, which more than offset the costs arising from the one-off upfront
payments related to the introduction of a mutual agreement redundancy scheme in
the public sector.

(8)       Most
of the above-mentioned measures were adopted through the 2014 Budget Law or by
changes to specific legislation. Some of the envisaged consolidation measures
have not yet been fully legislated to date. Among these are the tightening of
eligibility conditions of survivors' pensions (beyond the change of replacement
rates in case of accumulation with other pensions); the sale of online gambling
licences; the transfer of the postal service's (CTT) health fund to the general
government and the sale of port concessions.

(9)       A comprehensive reform of
the corporate income tax aimed at promoting simplification as well as boosting
the internationalisation and competitiveness of Portuguese companies was
approved in the Parliament in December 2013 and entered into force on 1 January
2014. A key feature of the reform is the reduction of the
standard CIT rate from 25% to 23% and a reduced 17%-rate applicable to the
first EUR 15 000 of taxable
income for SMEs. In addition to the existing surtaxes, a third state surtax of
7% will apply on taxable profits exceeding EUR 35 million. Other key provisions
of the reform include the revamping of tax incentives, changes to dividends and
capital gains taxation, group taxation and intangible assets regime, the
introduction of a participation exemption regime, an extension of the period
during which losses can be carried forward and a further limitation to interest
deductibility.

(10)     The
debt-to-GDP ratio is expected peak below 129.5% in 2013 and to decline
thereafter. The upward revision of the debt profile compared with the combined Eight and Ninth Review, in spite
of a better-than-expected budget execution, is to a large extent explained by a
substantial increase in the Treasury's cash balance as well as the postponement
to 2014 of some short-term debt reducing operations on the part of the Social
Security Financial Stabilisation Fund. Accordingly, the net debt – excluding
IGCP's cash deposits – is projected to peak at about 120% of GDP, slightly
below the level expected at the last review.The
expected decline in the general government debt-to-GDP ratio starting from 2014
will be supported by the projected economic recovery as well as by a decline in
cash deposits and the realisation of the Social Security's short-term
debt-reducing operations.

(11)     The
budgetary adjustment process is flanked by a range of fiscal structural
measures to enhance control over government expenditure and improve revenue
collection. The comprehensive reform of the Budget Framework Law is progressing
in a number of important areas. However, given the scope of the reform and the
need to engage in a broad-based consultation with all relevant stakeholders the
process is expected to take place in two phases. The new commitment control
system is showing results by limiting the build-up of new arrears but
implementation needs to be monitored closely to ensure that commitments are
covered by available funding. A task-force to evaluate and improve this process
will be created. Reforms in the public
administration are being implemented with a view to modernising and
rationalising public sector employment and entities. Reforms towards a modern
compliance risk management model of the revenue administration continue. A new
Risk Assessment Unit has been recently established and will become operational
shortly, focusing in the first place on improving compliance of certain groups
of taxpayers such as self-employed and high wealth individuals. Some other
reforms, such as the reduction of local tax offices, are delayed. While the
renegotiation of public-private partnerships (PPPs) has made progress, it could
not be concluded by the end of 2013. Still, significant savings are expected
for 2014 and beyond. State-owned
enterprises (SOEs) reached operational balance on average by the end of 2012
and additional reforms are foreseen to avoid a renewed deterioration of their
results. Privatisation has made good progress and proceeds exceed the target
under the programme. Reforms in the health care sector are producing
significant savings and implemen­tation is continuing broadly in line with
targets.

(12)     Policy implementation and
reforms in the health sector continue progressing and producing savings through
increases in efficiency. The consolidated deficit for the sector has been
significantly reduced since 2010. However, the remaining stock of arrears, the
tight budget line and increased labour costs due to the reinstatement of the 13th
and 14th bonus payments forced the authorities to speed up the
existing reforms. The existence of an important stock of arrears is strongly
(though not solely) related to the consistent underfunding of SOE hospitals
vis-à-vis their service provision. The authorities remain committed to
implementing the ongoing hospital reform and to the
continued fine-tuning of the set of measures related to pharmaceuticals,
centralised procurement and primary care.

(13)     The
banks' capital ratios comfortably continued to meet the European Bank Authority
regulatory capital buffers as well as the 10% Core Tier 1 Programme target.
This capital buffer remains adequate across the board when using the new
Capital Requirements Directive (CRD) IV rules for evaluating the banks' own
funds. These new capital rules apply from January 2014 onwards with a threshold set at 7% of Common Equity Tier 1 ratio.
The system wide loan-to-deposit is 120,7% and is likely to continue to decrease until end-2014, with some banks
already below this threshold. Efforts to diversify the sources of funding for
the corporate sector are being continuously strengthened. Building on the
recommendations of the 2013 external audit of the existing government-sponsored credit lines the authorities are
implementing the measures aiming to improve the performance and the governance
of those instruments including risk management capabilities and practices. The
legal framework for new debt restructuring tools directed at households and
aiming at the non-litigious settlement of debts is in place and fully
operational. Similarly, the impact of the changes in the corporate insolvency
and recovery law is being assessed as the new debt restructuring and debt
recovery mechanisms are now functioning. The crisis management toolkit is being completed. The
bank resolution fund is functioning, early intervention
powers have been introduced and the recapitalisation law has been amended to reflect the Communication from the Commission on the
application of State aid rules to support measures in favour of banks in the context of the financial crisis[3].The roadmap for
improving the effectiveness and governance of the National Guarantee System is
being implemented to better serve SMEs financing needs.

(14)     Further
progress has been made in implementing growth and competitiveness-enhancing
structural reforms. The authorities have adopted additional measures to reduce
unemployment and to boost labour market effectiveness, including enhaced activation
policies and a youth guarantee implementation plan. Revisions affecting the
definition of fair dismissals in the Labour Code are under preparation after
being declared unconstitutional. Additional measures have been adopted in the area of education, in which progress is
overall satisfactory.

(15)     The
government approved a new levy on energy operators for 2014 which must be
closely monitored to avoid distortions in the system. As regards the
elimination of the energy tariff debt and ensuring the sustainability of the
system, further reforms are required.

(16)     In
the telecommunication sector and postal sectors actions have been implemented
to comply with EU rules and underpin the attainment of the programme
objectives. The selection of the universal service
providers and the revision of the existing contract with the incumbent are
positive developments towards the full implementation of the Universal Service
Directive. The publication of legislation laying down the framework of the
concession contract with the national provider of the postal service will
reduce the current concession period, thus increasing competition. The authorities remain commited to increasing the sustainability and
efficiency in the transport sector.

(17)     Sector-specific
legislation with a view to aligning it with the Services Directive is
progressing, with some delays in the adoption of the regulatory framework for
the construction sector, the amended professional bodies' bylaws and internal
rules to adopt the horizontal framework law on public professinal associations.
The authorities are commited to further improving the functioning of the Point
of Single Contact

(18)     The
assessment of the urban lease reform is underway after the full implementation
of the new legal framework. The authorities aim at increasing the efforts to
fight tax evasion in the rental market.

(19)     The
new framework of the National Regulatory Authorities (NRAs) is advancing and
the relevant bylaws are being amended and are expected to be adopted shortly.
The publication of a new executive order establishing the contributions of the
regulators for 2014 has been delayed.

(20)     Reforms
of the judicial system continue progressing as planned.  Advances have been
made in the implementation of the Judicial Organisation Act to streamline the
court system, a law strenghtening the body for enforcement agents and
insolvency administrators has been published and a new extrajudicial procedure
creating a pre-trial triage to identify and settle out of court cases is being
finalised. Measures to improve the licensing environment and reduce
administrative burden have advanced with the adoption of legal provisions
streamlining licensing in the area of tourism, industry and territorial
planning. Legislation on commercial licensing is underway and the legal regime
for urbanism and building is being reviewed.

(21)     In
the light of these developments, Implementing Decision 2011/344/EU should be
amended,

HAS ADOPTED THIS DECISION:

Article 1

In Article 3 of Implementing Decision
2011/344/EU, paragraphs 8 and 9 are replaced by the following:

‘8. Portugal shall adopt the following
measures during 2014, in line with specifications in the Memorandum of
Understanding:

(1) 
the general government deficit shall not exceed
4% of GDP in 2014. For the calculation of this deficit, the possible budgetary
costs of bank support measures in the context of the government's financial
sector strategy shall not be taken into account. To achieve this objective Portugal shall deliver consolidation measures worth 2,3% of GDP as defined in the 2014 Budget Law and supporting legislation
adopted with this aim;

(2) 
beyond the currently adopted pension measures,
the existing pension legislation of the civil servants' pension regime CGA
shall be modified by end of March 2014 to ensure that the new rules on the
sustainability factor and thus the increased retirement age effectively apply
also to this regime; Portugal shall also develop new comprehensive measures as
part of the ongoing structural reform of pensions in the course of 2014 with a
view to ensuring their sustainability whilst strengthening equity principles;

(3) 
to control for potential expenditure slippages,
the government shall closely monitor the respect of the
ministerial expenditure ceilings through monthly reporting to the Council of
Ministers;

(4) 
Portugal shall swiftly
define and implement the envisaged changes in survivors' pensions eligibility
conditions as well as the conditions for the sale of online gamblig licences.
In addition, Portugal shall make decisive steps to implement the sale of the
port concessions;

(5) 
the comprehensive reform of the corporate income
tax shall be implemented within the existing budgetary envelope to respect the
fiscal consolidation targets;

(6) 
the standstill rule for tax expenditures at
central, regional or local level shall be maintained. Efforts to fight
tax evasion and fraud for various types of taxes shall be further strengthened,
inter alia by the monitoring of the new e-invoicing system. A study on
the shadow economy in the housing market shall be carried out in the first
quarter of 2014 with a view to seeking ways to reduce rental tax evasion;

(7) 
should adverse legal or other budgetary
execution risks materialise, Portugal shall implement compensatory measures of
high quality in order to meet the deficit target;

(8) 
beyond 2014, Portugal shall achieve a general
government deficit of no more than 2,5% of GDP in 2015 and arrest the
accumulation of domestic arrears. The strategy to achieve the target shall be
underpinned by the Reform of the State document which focuses on social
security sustainability, public administration reform, greater efficiency in
health and education and environmental taxation. Broad-based consultations with
political and social partners to advance and define reforms are ongoing. The
progress in this process shall be analysed at the eleventh review and
identified measures shall be reflected in the 2014 Fiscal Strategy Document. In
order to comply with the EU budgetary framework requirements, this document shall
also provide details of the medium-term budgetary plans;

(9) 
Portugal shall take
additional measures to further strengthen its Public Financial Management
system. Budget fragmentation shall be reduced by limiting the number of budget
entities and reviewing the classification of own revenues. The strategy for the
validation and settlement of arrears shall continue to be applied and the
commitment control law fully enforced in all public entities to prevent the
creation of new arrears. Portugal shall review the Budget Framework Law (BFL)
to fully transpose the relevant EU legislation. In addition, Portugal shall carry out a more comprehensive revision of its BFL to streamline the budget
appropriation structure, to strengthen accountability and to further anchor
public finances in a medium-term framework. Portugal shall ensure that the
measures to implement the new budgetary framework at central government level
shall also be applied at regional and local level;

(10) 
Portugal shall continue
the reform agenda towards a modern and more efficient revenue administration in
line with international best practises. Portugal shall reduce the number of tax
municipal offices by at least 25% in the first quarter of 2014 and by a further
25% by May 2014. The number of resources devoted to auditing in the tax
administration shall increase by at least 30% of the total staff. A new
Taxpayer Services Department, unifying different services for taxpayers, shall
be created within the tax administration. The Risk Management Unit shall be
fully operational in the first quarter of 2014, focusing initially on targeted
projects to improve compliance of self-employed professionals and high net
wealth individuals. The tax compliance situation shall be continuously
monitored;

(11) 
Portugal shall continue
implementing reforms of the public administration. Following the comprehensive
review of wage scales in the public administration by the twelfth review, a
single wage scale aimed at the rationalisation and consistency of remuneration
policy across all careers shall be developed in the first half of 2014 and
finalised by the end of 2014. This shall replace the wage revision included in
the 2014 Budget Law. In addition, following the survey on cash supplements, Portugal shall prepare a report on the comprehensive reform of wage supplements. Draft
legislation for a single supplement scale shall be presented by the eleventh
review;

(12) 
Portugal shall complete
the implementation of the strategy of shared services in public administration;

(13) 
Portugal shall fully
implement the new legal and institutional PPPs framework. Renegotiations of
PPPs shall proceed in various sectors in order to contain their budget impact.
Following the new SOEs framework law and in line with the Ministry of Finance's
enhanced shareholder role, a Technical Unit for the monitoring of SOEs shall be
created. The Government shall continue its comprehensive restructuring
programme of SOEs with a view to reaching a sustainable operational balance.
The Portuguese Government shall continue with the privatisations already in the
pipeline;

(14) 
Portugal shall present a
report with the following objectives:

i.        identify overlaps of services and
jurisdictions and other sources of inefficiencies between the
central and the local levels of government; and

ii.       reorganise the network of decentralised services of ministries mainly through the 'Lojas do Cidadão'
(administration and utilities single points of contact) network and other
approaches, encompassing more efficient geographical areas and intensifying the
use of shared services and digital government;

(15) 
Portugal shall ensure
the efficiency and effectiveness in the health care system by continuing with
the rational use of services and control of expendiures, reducing the public
spending on pharmaceuticals and eliminating arrears;

(16) 
Portugal shall continue the reorganisation and rational­isation of the
hospital network through specialisation, concentration and downsizing of hospital services, joint management
and joint operation of hospitals, and ensure the implementation of the multi-year action plan for hospital
reorganisation;

(17) 
following the adoption of the amendments to the
Law 6/2006 on new urban leases and the decree law which simplifies the
administrative procedure for renovations, Portugal shall undertake a
comprehensive review of the functioning of the housing market;

(18) 
while respecting the Constitutional Court's
ruling of 20 September 2013, Portugal shall devise and implement alternative
options of the labour market reform with similar effects;

(19) 
Portugal shall promote
wage developments which are consistent with the objectives of fostering job
creation and improving firms' competitiveness with a view to correcting
macroeconomic imbalances. Over the Programme period, any increase in minimum
wages shall take place only if justified by economic and labour market
developments;

(20) 
Portugal shall continue
to improve the effectiveness of its active labour market policies in line with
the results of the assessment report and the action plan to improve the
functioning of the public employment services;

(21) 
Portugal shall continue to implement the
measures set out in its action plans to improve the quality of secondary and
vocational education and training; in particular the Government shall present
plans to make the funding framework of schools more effective and the
professional schools of reference shall be established;

(22) 
Portugal shall complete
the adoption of the outstanding sectorial amendments necessary to fully
implement Directive 2006/123/EC of the European Parliament and the Council;

(23) 
Portugal shall publish
quarterly reports on recovery rates; duration and costs of corporate insolvency
cases; duration and cost of tax cases and on the clearance rate of enforcement
court cases;

(24) 
Portugal shall improve the business environment
by completing pending reforms on the reduction of administrative burden (fully
operational Points of Single Contact provided for by Directive 2006/123/EC and
'Zero Authorisation' projects) by converging the characteristics of regulated
professions to EU Directives and by carrying out further simplification of
existing licensing procedures, regulations and other administrative burdens in
the economy which are a major obstacle for the development of economic
activities;

(25) 
Portugal shall complete
the reform of the ports' governance system, including the overhaul of port
operation concessions;

(26) 
Portugal shall implement
the measures enhancing the functioning of the transport system;

(27) 
Portugal shall continue
to implement the transposition of the EU Railway Packages;

(28) 
Portugal shall implement
the plan to create an independent gas and electricity logistics operator
company;

(29) 
Portugal shall implement
the adequate measures to eliminate the energy tariff debt and to ensure the
sustainability of the national electricity system ;

(30) 
the Government shall submit to the Portuguese
Parliament the professional bodies' amended statutes;

(31) 
Portugal shall approve
the corresponding amendments to the bylaws of the National Regulatory
Authorities;

(32) 
Portugal shall continue
to eliminate entry barriers, soften existing authorisation requirements and
reduce administrative burden in the services sector;

(33) 
Portugal shall publish
quarterly reports on recovery rates; duration and costs of corporate insolvency
cases; duration and cost of tax cases and on the clearance rate of enforcement
court cases;

(34) 
Portugal shall adopt the
Construction Laws and the other sectorial amendments to fully implement the
Services Directive;

(35) 
Portugal shall assess
the impact of the optional VAT cash accounting regime;

(36) 
Portugal shall carry out
an inventory and an analysis of the cost of regulations that are likely to have
a higher impact on economic activity.

‘9. With a view to restoring confidence in
the financial sector, Portugal shall aim to maintain an adequate level of
capital in its banking sector and ensure an orderly deleveraging process in
compliance with the deadlines set in the Memorandum of Understanding. In that
regard, Portugal shall implement the strategy for the Portuguese banking sector
agreed with the Commission, the ECB and the IMF so that financial stability is
preserved. In particular, Portugal shall:

(1) 
monitor the banks' transition to the new capital rules as laid down in the Capital Requirements Directive
IV package (CRD IV) and ensure that capital buffers remain commensurate with
the challenging operating environment;

(2) 
advise banks to strengthen their collateral
buffers on a sustainable basis;

(3) 
remain committed to providing further support to
the banking system, if needed, encouraging banks to seek private solutions
while resources from the Bank Solvency Support Facility (BSSF) are available in
line with the recently amended EU-State aid rules to further support viable
banks, subject to strict conditionality;

(4) 
ensure a balanced and orderly deleveraging of the banking sector, which remains critical in
permanently eliminating funding imbalances and reducing the
reliance on Eurosystem funding in the medium-term.
Banks funding and capital plans shall be reviewed quarterly;

(5) 
continue to strengthen the supervisory
organisation of the BdP (Banco de Portugal), optimise its supervisory processes
and develop and implement new supervisory methodologies and tools. The BdP will
revise the standards on non-performing loans in order to achieve convergence
with the criteria included in the relevant EBA technical standard in line with
the timeframe set at the EU level;

(6) 
continue to monitor on a quarterly basis the
banks’ potential capital needs with a forward looking approach under stress
conditions also through the integration of the new top-down stress testing framework
into the quality assurance process, which allows for a review of the key
drivers of the results;

(7) 
continue to streamline the state-owned CGD (Caixa Geral de Depósitos) group;

(8) 
outsource the management of the BPN (Banco Português de Negócios) credits
currently held by Parvalorem to the firms selected through the bidding process
with a mandate to gradually recover the assets; and ensure timely disposal of the subsidiaries of, and the assets in, the other two state-owned
special purpose vehicles;

(9) 
analyse banks' recovery
plans and issue guidelines to the system
on recovery plans in line with the relevant (draft) EBA technical standards and
the forthcoming EU Directive on the recovery and resolution of credit
institutions, and prepare resolution plans on the basis of the reports
submitted by the banks;

(10) 
finalise the
implementation of the framework for financial institutions to engage in
out-of-court debt restructuring for households and smoothen the application of
the framework for restructuring of corporate debt;

(11) 
prepare quarterly reports
on the implementation of the new restructuring tools; on the basis of
the recently conducted survey, explore alternatives to increase the successful
recovery of companies adhering to the PER (the Special Revitalisation Procedure for companies in serious
financial distress) and the SIREVE
(the Companies' Recovery System through Extrajudicial Agreements for companies
in a difficult economic situation or imminent or actual insolvency);

(12) 
continue the monitoring
of the high indebtedness of the corporate and household sectors through
quarterly reports and also the implementation of the new debt restructuring
framework to ensure that it is working as effectively as possible;

(13) 
encourage on the basis of the made proposals the diversification of financing alternatives to the corporate sector, develop and implement
solutions that provide financing alternatives to traditional bank credit for
the corporate sector through an array of measures aiming to improve their
access to the capital markets;

(14) 
improve the performance and governance of the existing government-sponsored credit lines building on the results of the recent external audit. Implement the recently revised roadmap for
improving the governance of the National Guarantee System (NGS) and making
these schemes more efficient while minimising risks for the State;

(15) 
establish a development
financial institution (DFI) aiming at streamlining and centralising the
management of the reimbursable part of the financial instruments of EU
structural funds for the 2014-2020 programming period. The institution shall
not accept deposits or other repayable funds from the public, nor engage in
direct lending.

Article 2

This Decision is addressed to Portugal.

Article 3

This Decision shall be published in the Official Journal of the European Union.

Done at Brussels,

For
the Council

The
President

[1]               OJ L 118, 12.5.2010, p. 1.

[2]               Council Implementing Decision 2011/344/EU of 17 May 2011 on granting Union financial assistance to Portugal (OJ L 159, 17.6.2011, p. 88).

[3]               OJ C 216, 30.7.2013, p. 1.