The Council of the European Union has decided not to fine Spain
and Portugal for failing to reach budget deficit cutting goals and has
set “new fiscal paths” for each country.“The EU finance ministers decided to cancel financial fines for
Spain and Portugal. They also confirmed the new budgetary adjustment
paths for both countries. Effective action by Spain and Portugal will be
a necessary condition to lift the suspension of commitments under the
European Structural and Investment Funds,” said EU Commissioner Valdis Dombrovskis. Economic & Financial Affairs Commissioner Pierre Moscovici said
that by giving more time to Spain and Portugal to bring their public
deficits below the prescribed three percent, the “Council sets new credible fiscal trajectories, which will contribute to strengthening both their economies and the euro area.” “I trust that Spain and Portugal will respond accordingly to the collective decisions by the Commission and the Council,” said Moscovici. Portugal now has to end its excessive deficit by 2016, and Spain by
2018 at the latest. The measures taken by the two countries will be
assessed in the coming months. The Council called on Spain to reduce its deficit to 4.6 percent of
GDP in 2016, 3.1 percent in 2017, and to 2.2 percent in 2018. Portugal
should reduce the deficit to 2.5 percent in 2016. Last month, the eurozone finance ministers decided to start sanctions
procedures against Madrid and Lisbon for breaching EU spending rules.
This could have included a fine of up to 0.2 percent of a country's GDP
and the suspension of commitments or payments from EU structural funds
of up to 0.5 percent. According to EU fiscal rules, budget deficits should be no more than
three percent of the country’s GDP. The criterion was introduced ahead
of the euro launch in 1999 and so far no country has been penalized for
breaking them. RT
