The European Commission announces that Portugal no longer has macroeconomic imbalances. At stake was a shift to “vulnerability reduction” at the fiscal level.

Portugal stopped this Wednesday after years of warnings from the European Commission and reaching a point of fixation of excessive deficits and macroeconomic imbalances, the European Commission announced, explaining the change by “reducing vulnerabilities” at the fiscal level.

“France, Spain and Portugal no longer record imbalances as vulnerabilities have declined globally. Risks to fiscal sustainability will be analyzed under reformed fiscal rules,” the community’s executive director announced in a statement released today.

The information comes on the day the European Commission publishes the spring package of the European Semester, the European Union’s (EU) annual framework for coordinating economic, fiscal, social and employment policies.

The announcement came after Brussels placed Portugal on a list of EU member states with macroeconomic imbalances for several years and the country was subject to an excessive deficit procedure.

In the report on Portugal, the community’s executive director then concludes that the country “no longer has macroeconomic imbalances”, mainly because it has recorded “significant progress in reducing vulnerabilities associated with high private, public and external debt, which should continue to decline “

“After a hiatus caused by the Covid-19 pandemic crisis, private sector debt and government debt ratios have resumed their decline. They have fallen significantly since 2021, helped by strong GDP growth. [Produto Interno Bruto] and the recent budget surplus in the case of public debt,” Brussels lists.

At the same time, there has been a “significant” improvement in the net international investment position, driven by “strong economic growth and a current account surplus, and its composition remains favorable in light of the high percentage of non-performing instruments,” the institute adds. .

According to Brussels, while private and public debt levels “remain high”, they should “continue to decline in the future, even as nominal GDP growth becomes less favourable”.

“The current account balance recorded a surplus again last year and is expected to remain positive this year and next, reaching a budget surplus,” Brussels says.

Portugal moved from a deficit of 0.3% of GDP in 2022 to a budget surplus of 1.2% in 2023, and public debt fell from 112.4% of GDP at the end of 2022 to 99.1% at the end of 2022.

The European Commission’s forecasts for Portugal for spring 2024 predict that Portugal’s GDP will grow by 1.7% in 2024 and 1.9% in 2025, and inflation will be 2.3% in 2024 and 1.9% in 2025 year.

Also today, the institution announced the opening of the deficit-based excess deficit procedure for seven EU Member States, namely Belgium, France, Italy, Hungary, Malta, Poland and Slovakia, as the first preliminary step in the process.

The European Commission intends to formally propose to the Council of the EU in July the opening of procedures regarding excessive deficit-based deficits for these Member States, given that the general government deficit in these countries is recorded at levels above 3%. GDP.