LISBON: The target budget deficit set by Brussels, of 2.5%, is “achievable” the Bank of Portugal has said, although it warned “there is no room for complacency.” Bank of Portugal – 2.5% deficit “achievable”
In September of this year, the European Union (EU) agreed not to apply financial sanctions to Portugal for not cutting the deficit to below 3% of gross domestic product (GDP) and set a new target for 2016: reducing the deficit to 2.5% of GDP excluding any potential bailouts to the financial system. This target is the above the Government’s target of 2.2% of GDP for this year. In the October economic bulletin, published on Friday, which does not take into account the impact of the tax write offs announced on Thursday by the government to taxpayers with debts to the taxman or the social security system who pay the entirety of their debt or who agree to pay in instalments, the Bank of Portugal said the 2.5% target is “achievable.”
“The evidence available for the first quarter appears to suggest that the deficit target set by the Council of the European Union for the whole of 2016 can be achieved,” the Bank of Portugal said, noting however, “it is still very demanding,” is “subject to risk factors that are not negligible,” and “affected by a variety of factors, such as the late implementation of the budget and the impact of budgetary policy measures.”
The level of public debt is still “very high and not yet on a clear downward trajectory,” which according to the central bank, “underscores the importance of meeting the commitments taken on as part of the European budgetary rules.” Portugal’s debt reached 134% of GDP at the end of the first half of this year, to €223.27 billion.
