There is a risk of “significant deviation” in reducing the deficit – Daily News – Lisbon

Board of Public Finance analyzed the stability program and points out risks in the budgetary path

The Board of Public Finance ( CFP) warned today that there is a risk of a “significant shift” in reducing the deficit set in the stability program, which can compromise the Government planned strategy in the National Reform Programme.

in analyzing the Stability program released today, the CFP states that the trajectory presented by the government to balance the budget pass a deficit of 2.2% of Gross Domestic Product (GDP) this year to a surplus of 0.4% of GDP in 2020 presents several risks.

“the achievement of the risks outlined could lead therefore to a significant deviation situation [reducing the deficit], preventing access to the underlying flexibility of the National Reform Programme submitted recently,” he says the entity led by Teodora Cardoso.

Among these risks is the “lack of specification of an important part of fiscal consolidation measures,” including “asymmetry” in measures that damage the balance and that lead to their improvement, writes the CFP.

according to the organization, “while the policy measures which have a negative direct impact on the budget balance are fully specified in the case of measures with positive impact on balance (fiscal consolidation measures) more than half are not sufficiently specified. “

in addition, the stability program” does not explicitly incorporating the costs arising from legislative changes in an advanced stage of the legislative process and the measures susceptible to neutralize its budgetary effects, “considers the entity, exemplifying the return to 35 hours as normal working hours of civil servants.

the CFP also said that the projection of revenue is” anchored in increases annual taxes are to be defined (and, in cumulative terms, representing EUR 390 million) “and reflects” other effects that do not seem arises exclusively from developments in economic activity. “

the path of spending “is also heavily dependent on a set of unspecified measures”, which introduces “a risk factor in the budgetary targets to achieve.”

Remember that the impact estimated by the Ministry of Finance for all these measures is a cut of 1,755 million euros, or 0.8 percentage points of GDP, the entity considers that “previous experience with unspecified measures recommended, so particular care in the programming of their results, as its insufficient implementation can jeopardize the set-up “.

in addition, the CFP states that” the macroeconomic scenario also entails risks for budget planning “, since annual growth rates projected for exports and for investment risk not materialize. Another factor of concern for the CFP is the “uncertainty surrounding the Portuguese financial system.”

So the CFP warns that “the evolution of the budget balance by 2020 will fall short of the presented by the Ministry of Finance “and stresses that” the annual improvement in elapsing of the stability program 2016-2020 is below the minimum adjustment required by the European and national rules. “

in the Stability Programme 2016-2020, submitted to Brussels in April the Government has committed itself to improving the budget balance from a deficit of 2.2% of GDP this year for a surplus of 0,4% of GDP in 2020, fiscal consolidation of 2.5 percentage points of GDP; the greatest contribution attributed to expenditure, including expenditure on staff, benefits, intermediate consumption and interest.

in an annex to the stability program referred to the CFP and the Assembly of the Republic, after the document sent to Brussels, the Government signed up measures to reduce the deficit of 2,000 million euros, with the balance of inputs that weighs more, followed by savings from interest payments.