CELEX: 52011SC0814
Language: en
Date: 2011-06-07 00:00:00
Title: Recommendation for a COUNCIL RECOMMENDATION on the National Reform Programme 2011 of Portugal[and delivering a Council opinionon the updated Stability Programme of Portugal, 2011-2014]

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		52011SC0814
		
			Recommendation for a COUNCIL RECOMMENDATION on the National Reform Programme 2011 of Portugal[and delivering a Council opinionon the updated Stability Programme of Portugal, 2011-2014] /* SEC/2011/0814 final */
			
				
		
		
			
			   	Recommendation for a
COUNCIL RECOMMENDATION
on the National Reform Programme 2011 of
Portugal
[and delivering a Council opinion
on the updated Stability Programme of Portugal, 2011-2014]
THE COUNCIL OF THE EUROPEAN UNION,
Having regard to the Treaty on the
Functioning of the European Union, and in particular Articles 121(2) and 148(4)
thereof,
Having regard to Council Regulation (EC) No
1466/97 of 7 July 1997 on the strengthening of the surveillance of budgetary
positions and the surveillance and coordination of economic policies, and in
particular Article 5(3) thereof,
Having regard to the recommendation of the
European Commission,
Having regard to the conclusions of the
European Council,
Having regard to the opinion of the
Employment Committee,
After consulting the Economic and Financial
Committee,
Whereas:
(1)              
On 26 March 2010, the European Council agreed to
the European Commission's proposal to launch a new strategy for jobs and
growth, Europe 2020, based on enhanced coordination of economic policies, which
will focus on the key areas where action is needed to boost Europe’s potential
for sustainable growth and competitiveness.
(2)              
On 13 July 2010, the Council adopted a
recommendation on the broad guidelines for the economic policies of the Member
States and the Union (2010 to 2014) and, on 21 October 2010, adopted a decision
on guidelines for the employment policies of the Member States[1],
which together form the “integrated guidelines”. Member States were invited to
take the integrated guidelines into account in their national economic and
employment policies.
(3)              
On 12 January 2011, the Commission adopted the
first Annual Growth Survey, marking the start of a new cycle of economic
governance in the EU and the first European semester of ex-ante and integrated
policy coordination, which is anchored in the Europe 2020 strategy. 
(4)              
On 25 March 2011, the European Council endorsed
the priorities for fiscal consolidation and structural reform (in line with the
Council’s conclusions of 15 February and 7 March 2011 and further to the
Commission’s Annual Growth Survey). It underscored the need to give priority to
restoring sound budgets and fiscal sustainability, reducing unemployment
through labour market reforms and making new efforts to enhance growth. It
requested Member States to translate these priorities into concrete measures to
be included in their Stability or Convergence Programmes and National Reform
Programmes.
(5)              
On 25 March 2011, the European Council also
invited the Member States participating in the Euro Plus Pact to present their
commitments in time to be included in their Stability or Convergence Programmes
and their National Reform Programmes. Specific commitments and actions for 2011
are not explicitly communicated in the Portuguese National Reform Programme, but
are expected to be submitted to the European Council. 
(6)              
On 23 March 2011, the Portuguese government
submitted a Stability Programme for 2011-2014 to the national parliament, which
rejected it. On 19 April 2011, the Portuguese
government submitted a National Reform Programme. The
proposed macroeconomic and fiscal scenarios and the policy recommendations have
been overtaken by the Memorandum of Understanding signed on 17 May 2011. 
(7)              
On 17 May 2011, the Council adopted Decision
2011/0122 to make available to Portugal medium-term financial assistance for a
period of three years 2011-2014 in accordance with Council Regulation (EU) No
407/2010 of 11 May 2010 establishing a European financial stabilisation
mechanism. The accompanying Memorandum of Understanding signed on the same day
and its successive supplements lay down the economic policy conditions on the
basis of which the financial assistance is disbursed. 
(8)              
In 2010, Portugal's GDP grew at a rate of 1.3%.
This positive growth rate was, however, largely due to exceptional factors that
boosted exports and private consumption. Price and cost developments clearly
indicated that Portugal was not boosting competitiveness at a sufficiently fast
rate to redress its current account deficit, which was high at 10% of GDP in
2010. The weak overall economy and the steep increase in unemployment (11.2% at
the end of 2010), spilled into large government deficits, which exceeded 10% of
GDP in 2009 and 9% in 2010, up from 3.5% in 2008. As a result, Portugal has
recently come under increasing pressure in financial markets, raising concerns
about the sustainability of its public finances. Following consecutive
downgradings of Portuguese bonds by credit rating agencies, the country became
unable to refinance itself at rates compatible with long-term fiscal
sustainability. In parallel, the banking sector, which is heavily dependent on
external financing, particularly within the euro area, was increasingly cut off
from market funding.
(9)              
Portugal committed to implementing the economic
and financial adjustment programme with the aim of restoring confidence in its
sovereign debt and in the banking sector and supporting growth and employment.
It provides for comprehensive action on three fronts: (i) a credible and
balanced fiscal consolidation strategy, supported by structural fiscal measures
and better fiscal control; (ii) deep and frontloaded structural reforms in the
labour and product markets; and (iii) efforts to safeguard the financial sector
against disorderly deleveraging through market-based mechanisms supported by
back-up facilities.
(10)          
The Commission has assessed the National Reform
Programme[2]. It has taken into
account not only its relevance for sustainable fiscal and socio-economic policy
in Portugal but also its conformity with EU rules and guidance, given the need
to strengthen the overall economic governance of the European Union by
providing EU level input into future national decisions. In this context, the
Commission stresses the urgency of implementing the planned measures to comply
with Council Decision 2011/0122,
HEREBY
RECOMMENDS that Portugal should: 
Implement the measures as laid down in
Council Decision [2011/0122] and further specified in the Memorandum of
Understanding of 17 May 2011 and its subsequent supplements.
Done at Brussels,
                                                                       For
the Council
                                                                       The
President
[1]               Maintained for 2011 by Council Decision 2011/308/EU
of 19 May 2011.
[2]               See SEC(2011) 730.