EN 
 
 
OPINION OF THE EUROPEAN CENTRAL BANK 
of 12 November 2010 
on the Banco de Portugal’s staff remuneration and the budget 
(CON/2010/80) 
 
Introduction and legal basis  
On 25 October 2010, the European Central Bank (ECB)  received a request from the President of the 
Portuguese Parliament for an opinion on several provisions of the draft law containing the annual State budget proposed by the Government for 2011 (hereina fter the ‘2011 draft budget law’). Once approved, 
such provisions will apply to the whole public sector, including the Banco de Portugal (BdP)
1. 
The ECB’s competence to deliver an  opinion is based on Articles 127(4) and 282(5) of the Treaty on the 
Functioning of the European Union and on the third i ndent of Article 2(1) of Council Decision 98/415/EC 
of 29 June 1998 on the consultation of the European  Central Bank by national authorities regarding draft 
legislative provisions2, as the 2011 draft budget law relates to the BdP. In accordan ce with the first 
sentence of Article 17.5 of the Rules of Procedure of the European Central Bank, the Governing Council 
has adopted this opinion. 
 1.  Purpose of the 2011 draft budget law 
1.1 The 2011 draft budget law contains exceptional austerity measures, mostly focusing on tax 
increases and public spending cuts. The Portugu ese Government deems these measures necessary 
for the progressive stabilisation of public fina nces, which it proposes to achieve through the 
reduction of the budgetary deficit to 4.6 % of GDP in 2011.  
1.2 The planned measures are not only aimed at re storing the budgetary balance but also Portugal’s 
reputation in the international community, thereb y ensuring the regular financing of the economy 
and the sustainability of social policies. The me asures will apply without exceptions and supersede 
all currently applicable lex specialis  regimes, collective bargaini ng agreements and individual 
employment contracts. 
1.3 The draft provisions on which the ECB is consulted will directly affect the BdP from 
1 January 2011 in the following ways:  
                                                 
1  Pursuant to Article 2(1) of Law No 3/2004 of 15 January  on public institutes, the BdP is part of the indirect 
administration of the State. See also  paragraph 3.1 of this Opinion. 
2  OJ L 189, 3.7.1998, p. 42.  
2 (a)  Article 17 introduces a progressive reduction ra te up to 10 % on the excess amount of gross 
total monthly remunerations above EUR 1 500 earned by staff and members of decision-
making bodies;  
(b)  Article 20 introduces the same reduction ra te to the amount paid to any person under a 
service provision contract. The conclusion or re newal of such contracts requires the prior 
authorisation of the Ministry of Finance. Failure  to obtain authorisation could mean that such 
contracts are declared void;  
(c)  Article 22 prohibits the BdP from awarding its staff or managers any salary increases, 
performance-related bonuses or cash payments of a similar nature. In addition, the BdP is 
prohibited from: (i) opening procedures for promotion to specific positions and it must suspend any such ongoing procedures, (ii) granting any seniority-b ased automatic career 
progression, and (iii) undertaking career restructuring or reclassifications, until 31 December 2011 at the earliest. Acts carried out in breach of the above will be void and will result in the persons responsible for such acts incurring ci vil, financial and disciplinary liability;  
(d)  Article 25 prohibits the BdP from hiring or r ecruiting any new staff, regardless of the type 
and duration of the employment relationship, unless exceptionally justified by a significant public interest. In such case, the BdP is to pr ovide information on recruitment on a quarterly 
basis to the Minister for Finance.  
1.4 In addition, the 2011 draft budget law caps the amount of the meal allowance, prohibits the award 
of variable performance-related pay to managers and officers a nd imposes a tax surcharge of 10 % 
on any pension payments by the BdP exceeding EUR 5 000 per month. 
 2. General observations  2.1 The ECB understands and very much welcomes that the 2011 draft budget law is intended to serve 
the purpose of reducing public expenditure.  
2.2 The President of the Parliament has requested the ECB to deliver an opinion by 
12 November 2010. The ECB notes that, in cases of pa rticular urgency which do not allow for the 
normal consultation period, the consulting authorit y may indicate such urgency in its consultation 
request and ask for a shorter deadline for the adop tion of the ECB’s opinion. However, even though 
the ECB welcomes this consultation request and unde rstands the need for an accelerated legislative 
procedure, it would have appreciated being co nsulted by the authority preparing the draft 
legislation at an earlier stage.  
2.3 Article 4 of Decision 98/415/EC requires Member St ates to ensure that the ECB is consulted at an 
appropriate point in time to allow the consulting au thority to take its opini on into consideration 
before deciding on the substance of the draft legislative provisions. The ECB therefore expects that the consulting authority will take any additional me asures necessary to reflect the ECB’s opinion to 
the extent appropriate. It also encourages furt her consultation on any new amendments to the 
adopted law or any related implementing measure s which fall within its field of competence, 
3 provided that such measures do not merely constitute the implementation of the ECB’s 
recommendations. More generally, internal administ rative procedures should be in place to ensure 
that timely consultation of the ECB is taken into  account whenever such consultation is mandatory. 
 3. Specific observations 
3.1 Scope of the draft legal provisions 
3.1.1 In the absence of an express exemption, the pr ovisions apply to the BdP and to its Pension Fund
3, 
even though they are not specifically mentioned. Si nce the BdP is statutorily classified as a public 
institution governed by a lex specialis4, it simultaneously falls within the corresponding category of 
addressees foreseen in Article 17(9)(q) and (s) of the 2011 draft budget law. 
3.1.2 For this reason, the spending cuts and additional fiscal surcharges on salaries and pensions 
provided in the 2011 draft budget law will directly affect the members of the BdP’s decision-making bodies and its staff. 
3.2 Central bank independence  
The 2011 draft budget law has implications for centr al bank independence, in particular financial 
and institutional independence, as well as the pers onal independence of the members of the BdP’s 
decision-making bodies. 
Financial independence
 
3.2.1 The concept of financial inde pendence is assessed from the perspective of whether any third party 
is able to exercise either direct or indirect influence, not only on the performance of a national 
central bank’s (NCB) tasks, but also on its ability, both operational in terms of manpower and 
financial in terms of appropriate fina ncial resources, to fulfil its mandate5. As stated in the ECB’s 
convergence reports6 and several ECB opinions7 on issues concerning autonomy in staff matters, as 
provided for under Article 130 of the Treaty, a Member State may not impair the ability of its central bank to employ and retain the qualified staff necessary to perform independently the tasks 
conferred on it by the Treaty, the Statute of the European System of Central Banks and of the European Central Bank (hereinafter the ‘Statute of  the ESCB’) and national legislation. In addition, 
a Member State may not put its NCB in a position where it has limited or no control over its staff, or where the government of that Member State can influence its policy on staff matters. Autonomy in staff matters extends to i ssues relating to staff pensions. 
3.2.2 In order to protect the BdP’s autonomy in staff matters, the Portuguese authorities are under an 
obligation to ensure that the specific set of draf t provisions on which the ECB was consulted, and 
                                                 
3  See Article 48(1)(e) of Law No 3/2004. 
4  According to Article 48(2) of Law No 3/2004. 
5  See, for example, the ECB’s Convergence Report 2007, p. 20.  
6  See, for example, the ECB’s Convergence Report 2010, p. 23. 
7  See Opinions CON/2008/9, CON/ 2008/10, CON/2009/15, CON/2009/45, C ON/2009/47, CON/2010/42, CON/2010/51, 
CON/2010/56, CON/2010/58, CON/ 2010/59 and CON/2010/69. All ECB opinions are published on the ECB’s website at 
www.ecb.europa.eu. 
4 which are set out in paragraph 1.3, are decided on by the competent Portuguese authorities in close 
cooperation with the BdP8. Such cooperation must ensure the ongoing ability of the BdP to perform 
independently the tasks conferred on it by the Treaty, the Statute of the ESCB and national legislation. To this end, the BdP should be involve d in drawing up the relevant parts of the draft 
legislative provisions in an effective manner so as to safeguard central bank independence. Taking 
this into account, effective coopera tion with the BdP would require:  
(a) that the competent Portuguese authorities invite  the BdP in a timely and transparent manner 
to consider whether the overall objectives of  the 2011 draft budget law can be achieved 
without affecting the BdP’s ability to carry out its tasks and, if so, to present the measures 
the BdP intends to autonomously implement in the area of staff matters, and in particular 
staff remuneration, for the purposes of achieving the overall objectives of the 2011 draft budget law; and 
(b) that the BdP’s position is properly considered and reflected in the 2011 draft budget law 
prior to its final adoption with a specific focus on ensuring the BdP’s ongoing ability to carry out its tasks.  
Opinion CON/2010/58 provides a good example of effective cooperation between a government 
and an NCB. The Italian legislative provisions ex empted the NCB from its scope, while at the same 
time inviting the NCB to consider, taking into account its own legal order, whether the underlying 
reasons for the legislative provisions can be ach ieved without prejudicing the performance of the 
NCB’s tasks under the Treaty, the Statute of the ESCB and national legislation. The Portuguese 
authorities could follow the same or a similar appr oach in order to achieve effective cooperation 
and to safeguard central bank independence. 
3.2.3 In the light of the BdP’s expanded tasks, incl uding in the fields of consumer protection and the 
increased prudential supervisory responsibilities,  notably in the field of macroprudential 
supervision, the ECB is particularly concerned that qualified and sufficient human resources will be 
required, in addition to adequa te financing. The ECB refers to Opinion CON/2007/29 which 
highlighted the importance of having appropriate  and available resources to ensure BdP’s 
performance of the new tasks
9. 
3.2.4  The combination of salary reductions with th e prohibition on both: (a) hiring or recruiting new 
staff, unless exceptionally justified by a significan t public interest accompanied with the duty to 
provide information on recruitment on a quarterly  basis to the Minister for Finance; and 
(b) undertaking career restructuring, promotions or  reclassifications, directly impairs the ability of 
the BdP to employ and even possibly retain qualified staff and may amount de jure  to depriving its 
decision-making bodies from their powers of internal organisation and control over staff, or at least 
to significantly limiting them.  
                                                 
8  See Opinions CON/2008/9, CON/ 2008/10, CON/2009/15, CON/2009/45, C ON/2009/47, CON/2010/42, CON/2010/51, 
CON/2010/56, CON/2010/58, C ON/2010/59 and CON/2010/69. 
9  Opinion CON/2007/29, paragraph 2.5. 
5 3.2.5 The ECB is not aware of any cooperation be tween the Portuguese authorities and the BdP in 
drawing up the 2011 draft budget law. The ECB understa nds that Parliament is currently debating 
the 2011 draft budget law, and therefore the BdP c ould still be given the opportunity to express its 
views to accommodate a specific legal solution s ubject to the general qualifications made in 
paragraph 3.2.2. In this regard, the ECB understa nds that the BdP’s remuneration structure differs 
from that of the rest of the public sector, which is  an additional reason that effective cooperation is 
necessary in order to take account of this diffe rence, including any possible distortive effects. 
Absence of effective cooperation as set out in paragraph 3.2.2 would amount to a serious infringement of the principle of central bank independence.  
Institutional independence
 
3.2.6  Article 130 of the Treaty prohibits third par ties from giving instructions to NCBs and requires 
governments of the Member States to respect this  prohibition. Under the current regime, the BdP 
enjoys statutory autonomy in determining its personnel policy10 and the BdP’s staff are subject to 
individual employment law and collective bargaini ng agreements entered into between the BdP and 
banking sector unions11, which are complemented by internal rules.  
3.2.7 The proposed changes to the 2011 draft budget law represent a departure from this current regime. 
In particular, the 2011 draft budget law indirec tly requires the BdP to take specific personnel 
measures, i.e. not to hire or recruit new staff,  unless exceptionally justified by a significant public 
interest accompanied with the duty to provide inform ation on staff recruitments on a quarterly basis 
to the Ministry of Finance, and not to undertake career restructuring, promotions or reclassifications.  
3.2.8  Taking into account that these measures go beyond wh at is considered necessary to give full effect 
to the objective of reducing public expenditure, it would be a breach of the BdP’s institutional 
independence if such requirement would lead to an authorisation procedure whereby staff 
recruitment by the BdP could be rejected by the Mi nistry of Finance. The ECB considers that the 
exception from this requirement provided in th e 2011 draft budget law based on a significant public 
interest reason does not offers sufficient safeguard s for the protection of central bank independence 
and therefore recommends that it be amended. 
Personal independence
 
3.2.9 The 2011 draft budget law not only affects the remu neration of the BdP’s staff, but also that of the 
members of its decision-making bodies. Article 130 of the Treaty requires governments of the Member States to respect the principle of central bank independence and not to seek to influence the members of an NCB’s decisi on-making bodies in the performance of their tasks. To comply 
with the Treaty requirements with regard to pers onal independence of members of decision-making 
bodies, any adjustments to the salaries of the G overnor and other members of the BdP’s decision-
                                                 
10  Article 57 of the Organic Law of the BdP. 
11   Article 56 of the Organic Law of the BdP. 
6 making bodies who are involved in the performance of ESCB-related tasks should not affect the 
terms under which they have been appointed12 and should only apply to future appointments. 
3.2.10 The ECB understands that the proposed legislative changes apply not only to the BdP’s decision-
making bodies, but also more generally to the mana gement of public institutions in Portugal and as 
such are not seeking directly or indirectly to influence the BdP’s decision-making bodies in the 
performance of their tasks. However, the ECB cons iders that the 2011 draft budget law provisions 
may not be considered compatible with the principle of personal independence unless the 
qualifications made in respect of the principle of financial independence are taken into account. 
3.3. Prohibition of monetary financing - use of the funds resulting from the reduction in salaries 
3.3.1 The provisions on NCB salary reductions must also comply with the monetary financing 
prohibition laid down in Article 123 of the Treaty,  as further clarified in Council Regulation (EC) 
No 3603/93 of 13 December 1993 specifying the definitions for the application of the prohibitions referred to in Articles 104 [now 123] and 104b(1) [now 125(1)] of the Treaty
13. This provision 
prohibits overdraft facilities or any other type of credit facility with the ECB or NCBs in favour of 
Union institutions, bodies, offices or agencies, central  governments, regional, local or other public 
authorities, other bodies governed by public law, or  public undertakings of Member States, and the 
purchase directly from these public sector entities by th e ECB or NCBs of debt instruments. With a 
view to preserving the integrity of the NCB’s bala nce sheet, the monetary financing prohibition is 
of key importance in ensuring the primary monetary policy objective of price stability, which must not be impeded. Therefore, the prohibition must be  interpreted extensively to ensure its strict 
application. Even if Article 123(1) of the Treaty re fers literally to ‘credit facilities’, i.e. with an 
obligation to repay such credit, the prohibition also applies a fortiori  to other forms of funding, i.e. 
without an obligation to repay, since it has th e overall aim of public finance discipline and of 
prohibiting NCBs from financing the public sector . This implies that both the ultimate objective 
and the spirit of this provision must be  taken into account in its interpretation
14.  
3.3.2 From an accounting perspective, a reduction in  staff salaries will reduce an NCB’s operational 
costs, resulting in an increase in its financial r esults and leading to a potential increase in its 
financial resources. The principle of central ba nk financial independence guarantees that the BdP 
can independently use its financial resources as it sees fit to fulfil its mandate. The ECB notes that the BdP must be fully independent in deciding how  to use the funds resulting from any reduction in 
salaries or pensions that it pays. 
3.3.3 Under current Portuguese law, part of the N CB’s profits for the fiscal year (80 %) must be 
transferred to the State as a dividend, or to othe r reserves proposed by the Board of Directors and 
approved by the Minister for Finance, as provided fo r in Article 53(2)(c) of the Organic Law of the 
BdP. In the absence of effective cooperation with the BdP as set out in paragraph 3.2.2, the 2011 
                                                 
12  See, for example, Opinion CON/2010/56. 
13  OJ L 332, 31.12.1993, p. 1. 
14 See paragraph 9 of Opinion CON/2003/27. 
7 draft budget law could be interpreted as restricting the BdP’s freedom with respect to staff matters, 
for example, as regards the hiring of new staff or deciding on promotions of existing staff. 
Consequently, the BdP would not be seen as havi ng full independence in deciding how to use the 
funds resulting from the reduction in salaries or pens ions. If the BdP is not free to use the increased 
funds in accordance with the principle of financia l independence, this could be considered as an 
increase in the funding of the Portug uese State at the BdP’s expense.  
3.3.4 The draft law does not contain any provisions changing the rules on the BdP’s profit distribution. 
In particular, the BdP does not seem to be required to transfer to the State any net savings from the 
reduction in staff salaries and pensions during the fiscal year. As recently pointed out in Opinion 
CON/2010/6915, if the main purpose of the salary reduc tions was to eventually increase the 
financial resources of the State through an interim distribution of increased profits from the NCB to 
the State, this would appear to be a circumven tion of the objectives of the prohibition on monetary 
financing. In this respect, the ECB notes that any financial transfer of this nature from the BdP to 
the State budget, without the BdP having the oppor tunity to use the related resources independently 
for the fulfilment of its tasks, could be assimila ted to monetary financing under Article 123 of the 
Treaty. By contrast, a decrease in the NCB’s operational costs with a view to increasing its own financial resources to strengthen the performa nce of its mandate would be acceptable.  
 
This opinion will be published on the ECB’s website.    Done at Frankfurt am Main, 12 November 2010 
 
[signature] 
 
The President of the ECB 
Jean-Claude TRICHET 
                                                 
15  See paragraph 3.5.