CFP see the structural deficit falling, but warns you that OE is not prudent – the Public.en

The expenses and revenues provided in the proposed State Budget submitted by the Government to rely on too much of the effect of measures of an extraordinary and an environment of favourable cyclical conditions in the economy, warned on Tuesday the Council of Public Finances (CFP), a document that recognises, however, that if it is pointing in 2017 to a reduction of the structural deficit, something that has not been achieved in the last two years in Portugal.

The analysis of the entity led by Teodora Cardoso, OE to 2017 is in line with what have been the principles upheld previously by this institution: an economic model based solely on the recovery of the domestic demand is not sustainable, fiscal consolidation should be programmed and credible for a long period of time and the effort of containment should take into account the fragility of the country in the face of the possibility of occurrence of the external negative impacts.

thus, the CFP says who remains absent from the OE "an economic policy framework that promotes the adjustments, institutional, and structural, needed to stimulate the behaviors to be able to ensure the growth of the economy in an international context characterised by a fast technological evolution and political uncertainty". And says that the proposal submitted by the Government (and that is still being discussed in Parliament) "remains short of need", when one analyzes the degree of prudence.

The main criticism made by CSC at this level is that the Government is relying too much on the evolution of the economy depends on measures such as the expected with the recovery of the financial guarantee granted to the BPP. "The deficit reduction scheduled for 2017 stems mainly from the favorable impact of measures of a temporary nature and financial gains, in addition to expectations with respect to the macroeconomic scenario which consider insufficiently the degree of uncertainty prevailing, both internally and internationally", criticizes the report of the CFP.

Still, when you look at the evolution of the structural balance is expected to 2017, the leaders of the CFP give account of the fact that if you point in the budget proposal for a reduction of this indicator, something that turned out to not materialize as much in 2015 as in 2016.

THE CFP does not believe in the reduction of 0.6 percentage points envisaged by the Government, but it is estimated (based on the criteria used at european level for the estimation of potential GDP) the structural deficit will be reduced 0.4 points.

Although, with a reduction of 0.4 points, Portugal does not comply with to the letter the requirements of the fiscal rules of the european schools (that point to 0.6 point), this projection of the CFP is better than the one that has been made by the European Commission, which estimates a stabilization of the indicator and that on Wednesday will announce what is your assessment of the budget proposal made by Portugal.

"The positive variation of the structural primary balance suggests the resumes (scheduled) of the process of structural consolidation of public finances to a halt in 2015 and 2016", the report says, in anticipation of a return to a "restrictive policy counter-cyclical in 2017".