LISBON Feb 24 Portugal is set to exit the EU
excessive deficit procedure if the European Commission confirms
its latest forecasts for this year and next in a new assessment
in the spring, a top EU official said on Friday.
Lisbon says it cut the budget deficit last year to 2.1
percent of GDP or less - the lowest level in the country's
democratic history and below the 2.5 percent target set by
Brussels - after 4.4 percent in 2015.
The gap is also below the 3 percent EU threshold for
excessive deficits for the first time. The EU excessive deficit
procedure implies strict deadlines and targets set by Brussels
for countries to comply with to reduce the gap.
The commission's latest forecast pointed to a 2.3 percent
deficit but "in any case, Portugal has outperformed on the
target set by the (European) Council" in 2016, said European
Commission Vice President Valdis Dombrovskis.
The Commission expects the deficit this year to be 2 percent
and 2.2 percent in 2018.
"If those tendencies are confirmed when we use Eurostat data
in April and the spring economic forecasts, one can say that
Portugal is heading towards the end of its excessive deficit
procedures," Dombrovskis told lawmakers on a visit to Lisbon.
While generally lauding the fiscal consolidation efforts and
the country's economic recovery, he called for further reforms
to address Portugal's limited growth and heavy debt burden.
"We expect ambitious national reforms to tackle economic
imbalances in Portugal," he said, adding member states had to
address their structural problems "while the European Central
Bank is buying time" for such adjustments via its quantitative
Dombrovskis said Portugal, which received an EU/IMF bailout
in 2011-2014 due to a debt crisis, still needed to do more to
reduce its public debt, which at just over 130 percent is the
third-largest in Europe after Greece and Italy.
"Public debt has stabilised around 129-130 percent, which is
still very high. It is very important that public debt be put on
a clear downward trajectory. Markets need to see that the debt
is being reduced," he said.
(Reporting by Andrei Khalip; Editing by Tom Heneghan)