OE 2023; Brussels warns of debt risks and deficit for family support – State Budget

The European Commission this Tuesday urged the Portuguese Government to “take the necessary measures” so that the State Budget for 2023 (OE2023) is “coherent” with budgetary prudence, warning of “risks” in the deficit and debt for support to families .

“The Commission invites Portugal to take the necessary measures within the scope of the national budgetary process to ensure that the budget for 2023 is consistent with the recommendation adopted by the Council”, indicates the community executive in its communication with the global assessment on the budget projects of the next year, published today.

Taking into account the SB2023 proposal sent by Lisbon to Brussels and the Commission’s autumn forecasts, the institution points out that it is estimated in Portugal, next year, “that the growth of current expenditure financed at national level will approach the potential growth of the product in the medium term, assuming the planned reduction of measures in response to high energy prices, including temporary and targeted support for vulnerable families and companies”.

“Consequently, growth in primary current expenditure financed at national level runs the risk of not being in line with the Council’s recommendation”, points out Brussels.

In the mid-July Council recommendation, it was read that Portugal should, in 2023, “ensure a prudent fiscal policy, in particular by limiting the growth of nationally financed primary current expenditure below the potential growth of production in the medium term, taking into account the continuation of temporary and targeted support to households and businesses most vulnerable to rising energy prices and people fleeing Ukraine”.

In the communication released today, the European Commission emphasizes “being of the opinion that Portugal’s draft budget plan runs the risk of being only partially in compliance with the budgetary guidelines contained in the Council’s recommendation” because, although the country “has rapidly implemented energy measures as part of the emergency policy response to exceptional increases in energy prices, an extension of existing support measures and/or enactment of new support measures in response to high energy prices would contribute to further growth in net current expenditure financed nationally and for an increase in the deficit and public debt projected for 2023”.

“Therefore, it is important that Member States better focus these measures on the most vulnerable households and exposed businesses, in order to preserve incentives to reduce energy demand, and that they are withdrawn as pressures on energy prices ease. energy decrease”, insists Brussels.

For the community executive, Portugal also “made limited progress with regard to the structural part of the budget recommendations […] and thus invites the authorities to accelerate progress”.

In mid-July, the Council recommended that Portugal pursue “a budgetary policy aimed at achieving prudent medium-term budgetary positions in 2023 and ensuring a credible and gradual debt reduction and medium-term fiscal sustainability through gradual consolidation, investment and reforms”.

In mid-October, the Government delivered the SB2023 proposal to the Assembly of the Republic, which foresees that the Portuguese economy will grow by 1.3% in 2023 and register a budget deficit of 0.9% of the Gross Domestic Product (GDP).

Source: Jornal de Negócios by www.jornaldenegocios.pt.

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