# EUR-Lex - 52013PC0330 - EN

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# 52013PC0330

**Proposal for a COUNCIL IMPLEMENTING DECISION amending Implementing Decision 2011/344/EU on granting Union financial assistance to Portugal /* COM/2013/0330 final - 2013/0171 (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 and 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(9) of Decision
2011/344/EU, the Commission, together with the IMF and in liaison with the ECB,
has conducted the seventh 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.

Moreover, in line with the statement by the
Eurogroup and Ecofin Ministers of 12 April 2013, with a view to smoothing the
debt redemption profile and lowering the refinancing needs in the
post-programme years the Council Implementing Decision should be amended with a
view to extending the average maturity of the overall facility from “up to 12.5
years” to “up to 19.5 years” through the maturity extension of the individual
disbursements.

At the request of Portugal and market conditions permitting, the Commission may refinance all or part of its
initial borrowing in order to extend the maturity of an instalment or a
tranche, provided that the maximum average maturity of 19.5 years is respected.
Any amounts borrowed by the Commission in advance shall be kept on an account
with the ECB that the Commission has opened for the administration of the
financial assistance. The Commission will also make sure that the maturity at
which the refinancing operations are made caters for the proper management of
the margin under the EU Own Resources ceiling, including the redemption profile
of the EU bonds. The refinancing operations are expected to take place from
2016 and all costs incurred by the EU in concluding and carrying out each
operation will be borne by Portugal.

It should be noted that this decision also
aims at improving borrowing conditions for the sovereign as well as generating positive
spill-over effects for the private sector. These effects are beneficial for
both creditor and debtor countries and therefore contribute to the stability of
the euro area.

Taking into account the above factors, the
Commission considers that the changes consisting in the extension of the
average maturity of the EFSM loan to Portugal are conducive to securing the
programme's objectives.

2013/0171 (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)       In line with Article 3(9)
of Council 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 the seventh review of the authorities' progress on the
implementation of the agreed measures between 25 February and 14 March.
Subsequently between 14 and 17 April 2013 and between 8 and 11 May 2013
additional assessment of some fiscal measures was carried out.

(2)       An extension of the
maximum average maturity of the EU loans would be beneficial as it would
support Portugal's efforts to regain full market access and successfully exit
the programme. In order to take full benefit from the extension of the maximum
average maturity of the EU loan, the Commission should be authorised to extend
the maturity of instalments and tranches.

(3)       Real GDP fell by 3.2
percent in 2012 after an unexpectedly large contraction of economic activity
and employment in the final quarter of the year. These developments required a
downward revision of the economic outlook: real GDP is now forecast to contract
by 2.3 percent in 2013 due to the more negative carry-over from 2012, stronger
contraction in domestic consumption on the back of higher than previously
anticipated unemployment and a weaker outlook for external demand. The economic
recovery is also forecast to be more muted than previously expected with real
GDP forecast to bottom out in the second half of the year and to grow in 2014 at
an annual average rate of 0.6 percent; real GDP growth in 2015 is expected to
reach 1.5 percent. The unemployment rate is expected to peak at 181⁄2 percent of
the labour force in 2014.

(4)       The general government
deficit reached 6.4 percent of GDP in 2012, which is above the programme target
of 5 percent of GDP. The headline deficit was affected by a number of large
one-off operations, the budgetary impact of which was not known at the previous
review. The operations include the capital injection into the state-owned bank
CGD (0.5 percent of GDP), the re-routing through
the government of the conversion into equity of shareholder loans of Parpública to SAGESTAMO, two companies outside the
general government perimeter (0.5 percent of GDP) and the impairments
associated with the transfer of assets from BPN (0.1 percent of GDP). In addition, following an advice by Eurostat the revenues
from the sale of the operating concession for the major airports in Portugal
was treated as equity withdrawal and hence not impacting the general government
balance, contrary to what the government had foreseen in the budget (0.7
percent of GDP). Excluding the impact of these one-off factors from the
headline balance, the general government deficit would have amounted to 4.7 percent of GDP, below the target. Confining the
deficit to this level was challenging as the macro-economically driven
underperformance of revenues had to be compensated by higher-than-budgeted
savings, in particular in the public wage bill, intermediate consumption and
appropriations for new investment projects

(5)       Overall, the fiscal effort
in 2012, measured by the improvement in the structural balance, reached 2.4
percent of GDP and is in line with the Council Recommendation of 9 October 2012
to bring an end to the situation of an excessive government deficit in Portugal. The improvement in the structural primary balance was even higher at 2.7 percent
of GDP.

(6)       Following the developments
in 2012, the new 2013 budgetary baseline assumes that revenue shortfalls and
increased social transfers in kind are carried over whereas a large part of the
expenditure savings in the last quarter of 2012 are considered non-permanent,
leading to a negative carry-over of about 0.4 percent of GDP in 2013.
Furthermore, the significant deterioration in the macro-economic outlook in 2013
lowered the budgetary baseline by another 0.5 percent of GDP. In view of these
developments, the budgetary targets for the period 2013-2015 as specified at
the fifth review of the programme (4.5 percent of GDP in 2013 and 2.5 percent
of GDP in 2014) are no longer feasible. As the deviation is assessed to be
essentially outside the control of the government, a revision of the budgetary
adjustment seems appropriate.

(7)       The deficit targets have
therefore been adjusted to 5.5 percent of GDP in 2013, 4.0 percent of GDP in
2014 and 2.5 percent of GDP in 2015. This fiscal path has been recalibrated so
as to maintain a structural primary adjustment of close to 9 percent over the
period 2011-2015, while allowing the operation of automatic stabilizers and
taking into consideration financing and debt constraints as well as the social
costs of the adjustment. Even under the revised targets a sizable amount of consolidation
measures of 3.5 percent of GDP in 2013 and 2 percent of GDP in 2014 will be
necessary. A range of structural spending and revenue measures underpin the
envisaged adjustment over the programme period. The consolidation path is
expected to continue beyond the programme period so as to bring the deficit
clearly below the 3 percent threshold by 2015.

(8)       The 2013 Budget Law included
discretionary measures of a structural nature worth slightly more than 3
percent of GDP, after accounting for the reinstatement of one of the two bonus
payments for public workers and 1.1 times of the two bonus payments for pensioners
that had been cut in 2012. On April 5, however, the Constitutional Court ruled
against some of the 2013 budget provisions, including the remaining cut of one
bonus payment for public workers, 0.9 times of the bonus payment for pensioners
and a new surcharge on unemployment and sick leave benefits, thereby creating a
budgetary gap of 0.8 percent of GDP. To close this gap and to underpin the
required fiscal adjustment in 2014 and 2015, the government adopted in the
course of April and May a package of permanent expenditure-reducing measures
with a cumulative yield of EUR 4.7 billion or 2.8 percent of GDP over
2013-2014, of which measures worth 0.8 percent of GDP are frontloaded into
2013.

(9)       Also as a consequence of
the full reinstatement of the two bonus payments for public workers and
pensioners, revenue increases account for more than two thirds of the overall
fiscal consolidation effort in 2013 while expenditure cuts account for less
than one third, contrary to original intentions to focus the consolidation on
expenditure.

(10)     In 2013, revenue measures
include a restructuring of the personal income tax; a
surcharge of 3.5 percent on the part of taxable income exceeding the minimum
wage; a solidarity surcharge on the highest levels of income; the broadening of
the tax base and other revenue-raising changes in corporate taxation; higher
excises on tobacco, alcohol and natural gas; a broadening of the property tax
base after the revaluation of properties and an extraordinary solidarity
contribution on pensions to cope with ageing-related sustainability challenges. On the expenditure side, the measures envisage a sizeable
reduction in the public sector wage bill by optimising the allocation of
resources and resizing the public sector work force and by reducing over-time
payments, fringe benefits and compensations during extraordinary leave. Other
expenditure-saving measures include the continuation of rationalisation efforts
in the health sector; the streamlining of social
benefits and better targeting of social support; the reduction
of intermediate consumption across line ministries; savings from the
renegotiation of Public-Private-Partnership contracts and from further
restructuring efforts in state-owned enterprises. Some of the envisaged savings
will result from a frontloading of the measures which have been devised in the
framework of the public expenditure review (PER).

(11)     Whilst the former measures
are of a permanent nature, the government will also adopt non-permanent
measures including a front-loading of revenues from the
EU Funds, inter alia through the transfer of
Cohesion Fund resources from less mature projects to more advanced ones, and a
further reduction in capital expenditure (Polis programme).

(12)     On top of some of the
consolidation measures included in the supplementary budget, all other
legislative changes and legislative proposals required to implement the reforms
linked to the PER will be adopted by the Government or submitted to the
Parliament, as the case may be, by the end of the legislative session in
mid-July 2013.

(13)     For 2014, the fiscal
adjustment will proceed on the basis of the PER which the government has
undertaken over the past months and includes permanent expenditure-reducing
measures of 2 percent of GDP in 2014. The main impact of the PER measures will
be along three main axes: (1) reduction of the public sector wage bill; (2)
reduction of pension benefits and (3) sectoral expenditure cuts across line
ministries and programmes. The PER measures are part of a wider effort to
reform the state with the objective of increasing equity and efficiency in the
provision of social transfers and public services. The reduction in the wage
bill in 2014 aims at reducing the size of the public-sector work force while
shifting its composition towards higher-skilled employees, aligning the public
sector work rules with those of the private sector and making the remuneration
policy more transparent and merit-based. Specific reforms include the
transformation of the Special Mobility Scheme into a Requalification Programme,
aligning public sector working hours with those in the private sector (i.e.
increase from 35 to 40 hours work week), introduction of a bank of hours,
reduction in holiday entitlements, the implementation of a voluntary redundancy
scheme (which is estimated to generate one-time upfront cost of about
0.3 percent of GDP) and the introduction of a single wage and supplement
scale. A comprehensive pension reform will generate another important part of
the savings and will be based on equity principles and income progressivity,
thereby protecting the lowest pensions. Specifically, the reforms will aim at
reducing the current differences between the civil servants' system (CGA) and
the general system, increasing the statutory retirement age by changes to the
sustainability factor and introducing – if strictly needed – a progressive
sustainability contribution. Finally, savings in intermediate consumption and
expenditure programmes across line ministries will be stepped up.

(14)     In view of political and
legal risks in the implementation process, some of the PER measures may be
replaced by others of equivalent size and quality during the ongoing
consultation process with social and political partners.

(15)     The budgetary adjustment
process is flanked by a range of fiscal structural measures to enhance control
over government expenditure and improve revenue collection. In particular, a
comprehensive reform of the budgetary framework, including at central, regional
and local government levels, is bringing it in line with best practices in
budgetary procedures and management. The new commitment control system is
showing results but implementation needs to be monitored closely to ensure that
commitments are in line with funding. Reforms in the public administration will
continue with an important rationalisation of public employment and public
entities. Progress in the reform agenda of the revenue administration continues
and the authorities are enhancing monitoring and strengthening revenue
compliance. The renegotiation of Public-Private-Partnerships has started and
significant savings are projected for 2013 and beyond. State-owned enterprises
reached operational balance on average by the end of 2012 and additional
efficiency seeking reforms are foreseen to further improve the results. Reforms
in the health care sector are producing significant savings and implementation
is continuing broadly in line with targets.

(16)     Under the Commission's
current projections for nominal GDP growth (-1.0 percent in 2013, 1.6 percent
in 2014 and 3.3 percent in 2015) and the general government deficit of 5.5
percent of GDP in 2013, 4.0 percent of GDP in 2014 and 2.5 percent of GDP in
2015, the debt-to-GDP ratio is expected to develop as follows: 122.9 percent
of GDP in 2013, 124.2 percent of GDP in 2014 and 123.1 percent of GDP in
2015. Hence, the debt-to-GDP ratio would be placed on a downward path after
2014, assuming further progress in the reduction of the deficit. Debt dynamics
are affected by several below-the-line operations, including sizeable
acquisitions of financial assets, notably for possible bank recapitalisation
and financing to state-owned enterprises and differences between accrued and
cash interest payments.

(17)     In 2012, the bank capital augmentation
exercise was completed and allowed the participating banks
to meet the EBA regulatory capital buffers as well as the end-of-year 10
percent Core Tier 1 programme target. The
indicative loan-to-deposit target of 120 percent by 2014 is likely to be met,
with some banks already below this threshold. Efforts to diversify the sources
of funding for the corporate sector are being strengthened. The scope for
improving the performance and governance of existing government-sponsored
credit lines is being assessed.
The banks' recovery plans are being analysed and
resolution plans prepared.

(18)     Further progress has been
made in implementing growth- and competitiveness-enhancing structural reforms.
In addition to strengthening active labour market policies, the authorities
have adopted a comprehensive labour market reform. With a view to promoting
labour market flexibility and job creation, the new legal framework reduces severance
payments, eases condition of fair dismissals, increases working time flexibility,
enlarges possibilities for bargaining at firm level and
revises the unemployment insurance benefits system to increase incentives for a
rapid return to work, while guaranteeing a sufficient level of protection. The implementation of the action plans on secondary school and
vocational training is overall progressing as scheduled.

(19)     The implementation of the
Services Directive aiming at reducing barriers to entry and boost competition
and economic activity by facilitating access for new entrants to the market in
the different economic regimes is proceeding at good pace. A Framework Law to
set the main principles of the functioning of the most important National
Regulator Authorities (NRA), including their endowment with strong independence
and autonomy is to be submitted to the Parliament. Significant progress has
been made in the transposition of the Third Energy Package and the electricity
tariff debt reduction to ensure the sustainability of the system is on-going. Licensing
procedures and other administrative burdens are being simplified in different
economic sectors such as environment and territorial planning, agriculture and
rural development, industry, tourism or geology.

(20)     A comprehensive reform of
the housing rental market has entered into force in November 2012 which should
make the housing market more dynamic. Reforms of the judicial system are
advancing according to the agreed schedule. Progress has been achieved on the
reduction of backlog cases and broader reforms such as the geographical
reorganisation of the court districts and the reform of the Code of Civil
Procedure.

HAS ADOPTED THIS DECISION:

Article 1

1.           Article 1 of Implementing
Decision 2011/344/EU is amended as follows:

(a)
Paragraph 1 is replaced by the following:

‘1. The Union shall make available to Portugal a loan amounting to a maximum of EUR 26 billion, with a maximum average maturity
of 19.5 years. The maturity of individual tranches of the loan facility may be
of up to 30 years.’

(b)
The following paragraph is added:

‘9. At the request of Portugal, the Commission may extend the maturity of an instalment or a tranche, provided
that the maximum average maturity as set out in paragraph 1 is respected. The
Commission may refinance all or part of its borrowing for that purpose. Any amounts
borrowed in advance shall be kept on an account with the ECB that the
Commission has opened for the administration of the financial assistance.’

2.           Article 3 of Implementing
Decision 2011/344/EU is amended as follows:

(a)
Paragraphs 3 and 4 are replaced by the
following:

‘3. The general government deficit shall
not exceed 5.9 percent of GDP in 2011, 5.0 percent of GDP in 2012,
5.5 percent of GDP in 2013 and 4 percent of GDP in 2014. For the
calculation of this deficit, the possible budgetary costs of bank support
measures in the context of the Portuguese Government’s financial sector
strategy shall not be taken into account. The budgetary consolidation shall be
achieved by means of high-quality permanent measures and minimising the impact
on vulnerable groups.

4. Portugal shall adopt the measures
specified in paragraphs 5 to 8 before the end of the indicated year, with exact
deadlines for the years 2011-2014 being specified in the Memorandum of
Understanding. Portugal shall stand ready to take additional consolidation
measures to achieve the deficit targets throughout the Programme period.’

(b)
Paragraphs 7 to 9 are replaced by the following:

‘7. Portugal shall adopt the following
measures during 2013, in line with specifications in the Memorandum of
Understanding:

(a)
The general government deficit shall not exceed
5.5 percent of GDP in 2013. The consolidation measures included in the
2013 budget, including in the supplementary budget to be adopted by end-May, shall
be implemented throughout the year. Revenue-raising measures include a reform
of the personal income tax that simplifies the tax structure, broadens the tax
base through the elimination of some tax benefits and increases the average tax
rate, while preserving progressivity; a broadening of the corporate income tax
base; an increase in excise taxes and in recurrent property taxation and a
extraordinary solidarity contribution on pensions. Expenditure-saving measures
include a rationalisation of public administration, education, health care and
social benefits; a reduction of the wage bill by decreasing permanent and
temporary staff and reducing overtime pay; a lowering of operational and
capital expenditures by state-owened enterprises; renegotiations of contracts
with public-private partnerships; and cutbacks in intermediate consumption
across line ministries;

(b)
Some of the measures derived from the public
expenditure review shall be frontloaded to 2013. These mainly consist in a
further reduction in public employment through the transformation of the Special
Mobility Scheme into a Requalification programme, the convergence of public and
private sector working rules, especially by raising working hours in the public
sector from 35 to 40 hours per week, the increase of public employees'
contributions to the special health insurance schemes and the reduction of
fringe benefits. Rationalisation efforts across line ministries shall be
deepened beyond the original budget plans and social spending shall be further streamlined.
In addition, the above-mentioned permanent measures should be complemented by
temporary measures, to be replaced by permanent ones in 2014, consisting in
particular in a front-loading of revenue from the EU
Funds and a further reduction in capital expenditure
(Polis programme);

(c)
On top of some of the consolidation measures
included in the supplementary budget, all other legislative changes and
legislative proposals required to implement the reforms linked to the PER shall
be adopted by the Government or submitted to the Parliament, as the case may
be, by the end of the legislative session in mid-July 2013;

(d)
Portugal shall continue
implementing its privatisation programme;

(e)
Portugal shall
coordinate the exchange of information across levels of government to
facilitate revenue forecasting for the 2014 budgets of the Autonomous Regions
and the local authorities;

(f)
Portugal shall deepen
the use of shared services in public administration;

(g)
Portugal shall reduce
the number of local branches of line ministries (e.g. tax, social security,
justice) by merging them in citizens' shops and developing further the
e-administration over the duration of the programme;

(h)
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. Finalise the implementation of the
action plan by the end of 2013;

(i)
With the support of internationally-reputed
experts and following the adoption of the amendments to the New Urban Lease Act
Law 6/2006 and the Decree Law which simplifies the administrative procedure for
renovation, Portugal shall undertake a comprehensive review of the functioning
of the housing market;

(j)
Portugal shall develop a
nationwide land registration system to allow a more equal distribution of
benefits and costs in the execution of urban planning;

(k)
Portugal shall implement the measures set out in
its action plans to improve the quality of secondary and vocational education
and training, in particular the management tool to analyse, monitor and assess
the results and impacts of education and training policies shall be made fully
operational and the professional schools of reference shall be established;

(l)
Portugal shall complete
the adoption of the outstanding sectorial amendments necessary to fully
implement the Services Directive;

(m)
Portugal shall implement
targeted measures to achieve steady reduction of the backlogged enforcement
cases in view of resolving the backlog of court cases;

(n)
Portugal shall submit to
Parliament Framework Law on the main National Regulatory Authorities in order
to guarantee their full independence and financial, administrative and
management autonomy;

(o)
Portugal shall improve the business environment
by completing pending reforms on the reduction of administrative burden [fully
operational Point of Single Contact (PSC) and 'Zero Authorisation' projects]
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;

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

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

(r)
Portugal shall implement
the measures eliminating the energy tariff debt and fully transpose the Third
EU Energy Package;

(s)
Portugal shall ensure that the new legal and
institutional PPP framework is applied and the PPP road contracts continue to
be renegotiated in line with the strategic plan presented by the government and with the regulatory
framework revision, in order to obtain substantial fiscal gains, particularly
in 2013;

(t)
Portugal shall continue
to focus on measures to combat tax fraud and evasion and strengthen taxpayers'
compliance.

(u)
Portugal shall introduce
adjustments to the severance payments regime in accordance with the provisions
of the Memorandum of Understanding;

(v)
Portugal shall promote
wage developments 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;

(w)
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.

8. The general government deficit shall not
exceed 4.0 percent of GDP in 2014. To achieve this objective Portugal shall implement the expenditure-reducing measures that were prepared in the
framework of the public expenditure review. Overall, the amount of these
measures shall add up to 2 percent of GDP in 2014 and shall include the
reduction in the wage bill aimed at reducing the size of the public-sector work
force while changing its composition towards higher-skilled employees; further
convergence of public and private sector work rules, i.e. increase in working
hours, introduction of a bank of hours, reduction in holiday entitlements; the
implementation of a voluntary redundancy scheme; a reduction of the current
differences between the civil servants' pension regime (CGA) and the general
pension system; an increase in the statutory retirement age; and – if strictly
needed – a progressive sustainability contribution on pensions. Furthermore,
savings in intermediate consumption and expenditure programs across line
ministries shall be stepped up. Some of the measures may be partly or fully replaced
by others of equivalent size and quality.

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:

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

(b)
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;

(c)
encourage the diversification of financing
alternatives for the corporate sector and in particular the SMEs through an array
of measures aiming at improving their access to the capital markets and export
credit insurance;

(d)
continue to streamline the state-owned CGD
group;

(e)
optimise the process for recovering the assets
transferred from BPN to the three state-owned special purpose vehicles through
the outsourcing to a professional third party of the management of the assets,
with a mandate to gradually recover the assets over time. The Portuguese
Government shall select the party managing the credits through the on-going competitive
bidding process and include adequate incentives to maximise the recoveries and
minimise operational costs into the mandate. The Portuguese Government shall
ensure timely disposal of the subsidiaries and the assets in the other two
state-owned special purpose vehicles;

(f)
on the basis of the set of preliminary proposals
to encourage the diversification of financing alternatives to the corporate
sector presented, develop and implement solutions that
provide financing alternatives to traditional bank credit for the corporate
sector. The Portuguese Government shall assess the
effectiveness of government-sponsored export credit insurance schemes with a
view to taking appropriate measures compatible with EU law to promote exports;

(g)
analyse banks' recovery plans and issue
guidelines to the system on recovery plans and prepare resolution plans on the
basis of the reports submitted by the banks. Ensure the initial and annual
funding arrangements for the Resolution Fund are settled. The implementation of
the recovery and resolution plans of the banks shall give priority to those
that are of systemic importance;

(h)
implement the framework for financial
institutions to engage in out-of-court debt restructuring for households,
smoothen the application for restructuring of corporate debt and implement an
action plan to raise public awareness of the restructuring tools;

(i)
Prepare quarterly reports on the implementation
of the new restructuring tools and conduct a survey of insolvency
stakeholders to inquire about the appropriateness of the existing debt
restructuring tools and possible gaps or bottlenecks, explore alternatives to
increase the successful recovery of companies adhering to the PER (the Special
Revitalization Procedure for companies in serious financial distress) and the
SIREVE (the Companies’ Recovery System through Extrajudicial Agreements for
companies in difficult economic situation or imminent or actual insolvency);

(j)
assess the scope for
improving the performance and governance of existing government-sponsored credit
lines, establish a quarterly monitoring and reporting mechanism on the
allocation of the government sponsored credit lines aimed at facilitating
access to finance to SMEs; conduct an external audit of the National Guarantee
System.’

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.