Recommendation for a COUNCIL DECISION abrogating Decision 2010/288/EU on the existence of an excessive deficit in Portugal
Date: 2017-05-22
Institutions: Directorate-General for Economic and Financial Affairs, European Commission
Subjects: Portugal, budget deficit, budget estimate, budget policy, public debt, public expenditure

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   EUROPEAN COMMISSION  Brussels, 22.5.2017  COM(2017) 530 final   Recommendation for a COUNCIL DECISION abrogating Decision 2010/288/EU on the existence of an excessive deficit in Portugal  
 
 
Recommendation for a 

COUNCIL DECISION 

abrogating Decision 2010/288/EU on the existence of an excessive deficit in Portugal 

THE COUNCIL OF THE EUROPEAN UNION, 

Having  regard  to  the  Treaty  on  the  Functioning  of  the  European  Union,  and  in  particular 
Article 126(12) thereof, 

Having regard to the recommendation from the Commission, 

Whereas: 

(1) 

(2) 

(3) 

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On 2 December 2009, following a recommendation from the Commission, the Council 
decided, by Decision 2010/288/EU1, in accordance with Article 126(6) of the Treaty, 
that  an  excessive  deficit  existed  in  Portugal.  The  Council  noted  that  the  general 
government  deficit  planned  for  2009  was  5.9%  of  GDP,  thus  above  the  3%-of-GDP 
Treaty reference value. The general government gross debt (which had been above the 
60%-of-GDP Treaty reference value since 2005) was planned to reach 74.5% of GDP 
in 2009. 

On the same date, in accordance with Article 126(7) of the Treaty and Article 3(4) of 
Regulation  (EC)  No  1467/97,2  the  Council,  based  on  a  recommendation  from  the 
Commission,  addressed  a  recommendation  to  Portugal  with  a  view  to  bringing  the 
excessive  deficit  situation  to  an  end  by  2013  at  the  latest.  The  Council  also  set  a 
deadline of 2 June 2010 for effective action to be taken. 

Following  the  request  by  the  Portuguese  authorities  for  financial  assistance  from  the 
Union, the Member States whose currency is the euro and the International Monetary 
Fund  (IMF),  the  Council  granted  financial  assistance  to  Portugal.  The  Memorandum 
the 
of  Understanding  on  Specific  Economic  Policy  Conditionality  between 
Commission and the Portuguese authorities was signed on 17 May 2011.3 Thereafter 
the Council has addressed two new recommendations to Portugal on 9 October 2012 
and  21  June  2013  on  the  basis  of  Article  126(7)  of  the  Treaty,  which  extended  the 
deadline  for  correcting  the  excessive  deficit  to  2014  and  2015,  respectively.  In  both 
cases, the Council considered that Portugal had taken effective action, but unexpected 
adverse  economic  events  with  major  unfavourable  consequences  for  government 
finances had occurred. In line with Article 10(2)(a) of Regulation (EU) No 472/2013,4 

Council Decision 2010/288/EU of 2 December 2009 on the existence of an excessive deficit in Portugal 
(OJ L 125, 21.5.2010, p. 44). 
Council Regulation (EC) No 1467/97 of 7 July 1997 on speeding up and clarifying the implementation 
of the excessive deficit procedure (OJ L 209, 2.8.1997, p. 6). 
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).   
Regulation  (EU)  No  473/2013  of  the  European  Parliament  and  of  the  Council  of  21  May  2013  on 
common provisions for monitoring and assessing draft budgetary plans and ensuring the correction of 
excessive deficit of the Member States in the euro area (OJ L 140, 27.5.2013, p. 11). 

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(4) 

(5) 

(6) 

(7) 

(8) 

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Portugal was exempted from a separate reporting under the excessive deficit procedure 
and reported in the framework of its macroeconomic adjustment programme.5 

taken  effective  action 

In accordance with Article 126(8) of the Treaty, the Council decided on 12 July 2016 
that  Portugal  had  not 
the  Council 
Recommendation of 21 June 2013. On 8 August 2016, the Council adopted a decision 
in  accordance  with  Article  126(9)  of  the  Treaty  giving  notice  to  Portugal  to  take 
measures for the deficit reduction judged necessary in order to remedy the situation of 
excessive deficit, thereby setting a new deadline for correction by 2016. The Council 
also set a deadline of 15 October 2016 for effective action to be taken. 

in  response 

to 

On 16 November 2016, the Commission concluded that Portugal had taken effective 
action in compliance with Council Decision of 8 August 2016 under Article 126(9) of 
the Treaty. 

In  accordance  with  Article  4  of  the  Protocol  on  the  excessive  deficit  procedure 
annexed to the Treaties, the Commission provides the data for the implementation of 
the procedure. As part of the application of that Protocol, Member States are to notify 
data  on  government  deficits  and  debt  and  other  associated  variables  twice  a  year, 
namely  before  1  April  and  before  1  October,  in  accordance  with  Article  3  of 
Regulation (EC) No 479/20096.  

The  Council  should  take  a  decision  to  abrogate  a  decision  on  the  existence  of  an 
excessive deficit on the basis of notified data. Moreover, a decision on the existence of 
an excessive deficit should be abrogated only if the Commission forecasts indicate that 
the  deficit  will  not  exceed  the  3%-of-GDP  Treaty  reference  value  over  the  forecast 
horizon7. 

Based on data provided by the Commission  (Eurostat) in accordance with Article  14 
of  Regulation  (EC)  No  479/2009,  following  the  April  2017  notification  by  Portugal, 
the 2017 Stability Programme and the Commission 2017 spring forecast, the following 
conclusions are warranted: 

– 

After  reaching  4.4%  of  GDP  in  2015  (3.1%  of  GDP  net  of  one-offs),  the 
general  government  deficit  was  reduced  to  2.0%  of  GDP  in  2016  (2.3%  of 
GDP  net  of  one-offs).  As  compared  to  the  Budget  2016  targets,  the  deficit 
reduction in 2016 was mainly driven by the containment of current expenditure 
(-0.9%  of  GDP),  particularly  in  intermediate  consumption,  and  under-
execution  of  capital  expenditure  (-0.5%  of  GDP),  which  more 
than 
compensated  the  revenue  shortfall  (1.1%  of  GDP)  for  both  tax  and  non-tax 
revenue.  

– 

The  Stability  Programme  for  2017-2021,  submitted  by  the  Portuguese 
government on 28 April 2017, plans the general government deficit to decline 

to 

can 

deficit 

related 

excessive 

documents 

procedures 

All 
https://ec.europa.eu/info/business-economy-euro/economic-and-fiscal-policy-coordination/eu-
economic-governance-monitoring-prevention-correction/stability-and-growth-pact/corrective-arm-
excessive-deficit-procedure/excessive-deficit-procedures-overview_en 
Council  Regulation  (EC)  No  479/2009  of  25  May  2009  on  the  application  of  the  Protocol  on  the 
excessive  deficit  procedure  annexed  to  the  Treaty  establishing  the  European  Community  (OJ  L  145, 
10.6.2009, p. 1). 
In line with the “Specifications on the implementation of the Stability and Growth Pact and guidelines on the 
format  and  content  of  stability  and  convergence  programmes”,  adopted  by  the  Economic  and  Financial 
Committee on 5 July 2016, available at: 
http://ec.europa.eu/economy_finance/economic_governance/sgp/legal_texts/index_en.htm. 

found 

at: 

be 

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to  1.5%  of  GDP  in  2017  and  1.0%  of  GDP  in  2018.  The  Commission  2017 
spring forecast projects a deficit of 1.8% of GDP in 2017 and 1.9% of GDP in 
2018,  thus  remaining  below  the  3%-of-GDP  Treaty  reference  value  over  the 
forecast  horizon.  Those  projections  do  not  include  the  potential  deficit-
increasing impact of bank support measures8, which should not put at risk the 
durable reduction of the deficit. 

– 

– 

The  structural  balance,  which  is  the  general  government  balance  adjusted  for 
the economic cycle and net of one-off and other temporary measures, improved 
by 0.3% of GDP in 2016.  

The gross government debt-to-GDP increased to 130.4% in 2016, from 129.2% 
in 2015, due to debt-increasing stock-flow adjustments. The Commission 2017 
spring  forecast  projects  the  debt  ratio  to  decrease  to  128.5%  in  2017  and 
126.2% in 2018 due to primary surpluses.  

(9) 

In accordance with Article 126(12) of the Treaty, a Council Decision on the existence 
of  an  excessive  deficit  is  to  be  abrogated  when  the  excessive  deficit  in  the  Member 
State concerned has, in the view of the Council, been corrected. 

(10) 

In  the  view  of  the  Council,  the  excessive  deficit  in  Portugal  has  been  corrected  and 
Decision 2010/288/EU should therefore be abrogated. 

(11)  As  from  2017,  the  year  following  the  correction  of  the  excessive  deficit,  Portugal  is 
subject  to  the  preventive  arm  of  the  Stability  and  Growth  Pact  and  should  progress 
towards  its  medium-term  budgetary  objective  at  an  appropriate  pace,  including 
respecting  the  expenditure  benchmark,  and  comply  with  the  debt  criterion  in 
accordance with Article 2(1a) of Regulation (EC) No 1467/97,  

HAS ADOPTED THIS DECISION:  

Article 1 

From an overall assessment it follows that the excessive deficit situation in Portugal has been 
corrected. 

Decision 2010/288/EU is hereby abrogated. 

Article 2 

This Decision is addressed to the Portuguese Republic. 

Done at Brussels, 

Article 3 

For the Council 
The President 

8 

Commission Decision of 10 March 2017 – SA.47178 – Portugal – Recapitalisation of Caixa Geral de 
Depósitos, S.A., http://europa.eu/rapid/press-release_IP-17-556_en.htm 

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