Portugal

VII - Six-Pack

The ‘Six-Pack’ is a package of six legislative measures (five regulations and one directive) improving the Economic governance in the EU. The Commission made the original proposals in September 2010. After negotiations between the Council and the European Parliament, the package was adopted in November 2011 and entered into force on December 13, 2011. Part of the ‘Six-Pack’ measures applies only to the Eurozone member states (see the individual titles below).         
The ‘Six-Pack’ measures reinforce the Stability and Growth Pact (SGP), among others by introducing a new Macroeconomic Imbalances Procedure, new sanctions (for Eurozone member states) and reversed qualified majority voting. Also, there is more attention for the debt-criterion.  
(
http://ec.europa.eu/economy_finance/economic_governance/index_en.htm)

Negotiation
VII.1
What positions did Portugal adopt in the negotiation of the ‘Six-Pack’, in particular in relation to the implications of the ‘Six-Pack’ for (budgetary) sovereignty, constitutional law
, socio-economic fundamental rights, and the budgetary process?

Portugal did not oppose to the six-pack within the EU.

The Budget/Finance/Public Administration Parliamentary Committee, the European Affairs Committee and the Portuguese Public Finance Council issued opinions on the Six-Pack. These opinions were not issued as a bulk.[1] The Six-Pack is a set of five regulations (1173/2011, 1174/2011, 1175/2011, 1176/2011 and 1177) – which are all directly applicable; and a directive (2011/85/UE) – which requires transposition (and is dealt with in questions VII.2 and VII.5). These issues are at the national level dealt with separately.

On the “Alert Mechanism” – part of the six-pack and forming part of the European Semester and merely as an example – the European Affairs Committee was critical of the “asymmetrical treatment given to external deficits and surpluses” affirming that it “lacks adequate justification. There seems to be a desire to establish that the EU should produce a surplus compared to the rest of the world. However, it is the Commission itself – and indeed the G20 – which states that correcting macroeconomic imbalances is not only a European but also international goal; As stated in the report itself, one of the causes of excessive indebtedness in some Member States was closer financial integration in the EU and the cut in interest rates. A proper diagnosis of macroeconomic imbalances and their subsequent correction must analyse the role of the financial sector and the ECB in the dynamics of indebtedness and flows before and during the crisis, especially among the euro zone countries”.[2]

Regardless of the opinions issued by parliamentary committees or CFP it is not possible to assess exactly what was the government’s position assumed, in the exercise of its powers, during the Council meetings – in relation to the six-pack or other measures. [3] In general, the government assumed a positive posture towards the successive packs and pacts; at worst it would often affirm it was the “possible consensus” and reaffirmed Portugal’s diminished leverage to negotiate.

Taking into consideration the overlapping nature and substance of the “six-pack” the government considered that both the adoption of resolution n.º 84/2012, of 3 July, that approved the TSCG (also known as fiscal compact) and resolution n.º 9/2012, of 9 December that approved the treaty on the ESM “[provided] a more solemn framework to the set of EU coordinated initiatives such as the Euro Plus Pact European Semester and the Six-Pack”.[4]

Directive 2011/85/EU
Council Directive 2011/85/EU of 8 November 2011 on requirements for budgetary frameworks of the Member States

Implementation  
VII.2
What measures are being taken to implement Directive 2011/85/EU on requirements for budgetary frameworks (required before 31 December 2013, article 15 Directive 2011/85/EU)?

Directive 2011/85/UE was transposed through the adoption of Law n.º 37/2013, 14 June that altered the budgetary framework law; it was proposed on January 10th, 2013 and finally approved, after a long list of reports stemming from different entities, in June 2013.[5] It should be noted that the Portuguese Public Finance Council (CFP) made a report stating that it does not consider that the contemplated measures configure a clear implementation of the Directive, for the predictions relating to a contraction of the deficit do not seem to be realistic, and asks for more consultation from the Parliament.[6] It should be noted, however, that the amendments made are especially focused on a medium-term approach to the budget and mechanisms for correction of potential deviations (amendments were made to articles 12º-C, 12º-D, 36º and 68º; additions count articles 10º-D to –G and 72º-B to –D.)[7]

See question II.2.

 

Implementation difficulties       
VII.3
What political/legal difficulties
did Portugal encounter in the implementation process, in particular in relation to implications of the directive for (budgetary) sovereignty, constitutional law and the budgetary process?

See questions VII.1, VII.2, VII.4.

Macroeconomic and budgetary forecasts 
VII.4
What institution will be responsible for producing macroeconomic and budgetary forecasts (article 4(5) Directive 2011/85/EU)? What institution will conduct an unbiased and comprehensive evaluation of these forecasts (article 4(6) Directive 2011/85/EU)?

The Ministry of Finance produces the macroeconomic and budgetary forecasts but it’s the Portuguese Public Finance Council (hereinafter CFP) that conducts an independent evaluation of these forecasts.

CFP’s legal regime satisfies all the conditions established in the European legislation – Regulation (EU) no. 473/2013 and the Directive 2011/85/EU. 

The CFP is an independent body established by the Article n.12.I of the Law n. 91/2001, of 20 August (Budget Framework Law), with wording that was given by the Law n. 22/2011, of 20 May. The Statute of CFP was approved by the Law no. 54/2011 of 19 October, as amended by Law no. 82-B/2014 of 31 December.

According to article 4 of its Statutes, the mission of the CFP is to undertake an independent assessment of the consistency, compliance and sustainability of fiscal policy. The CFP carries out its mission by performing the tasks defined in article 6 of the Statutes: a) assessment of the macroeconomic scenarios adopted by the Government and the consistency of budget projections with these scenarios; b) assessment of whether the fiscal rules laid down are complied with; c) analysis of the dynamics of the public debt and its sustainability; d) Analysis of the dynamics of existing commitments, with special emphasis on the pensions and health systems and on public-private partnerships and concessions, including an assessment of their implications for the sustainability of the public finances; e) assessment of the financial position of the autonomous regions and local governments; f) assessment of the economic and financial situation of public enterprises, and their potential impact on the consolidated public accounts and their sustainability; g) analysis of tax expenditures; h) monitoring of the budget outturn.

The CFP presents reports on: the Stability and Growth Programme and other procedures within the regulatory European framework of the Stability and Growth Pact; the Multiannual budgetary framework programming; the State Budget draft. The CFP produces also regular reports concerning public finances’ sustainability and others that may consider relevant, including on the budget outturn of the previous year. All reports produced by the CFP are sent to the President of the Republic, to the Assembly of the Republic, to the Government, to the Tribunal de Contas (Court of Auditors) and to the Banco de Portugal (Bank of Portugal).

See also question II.3.

 

Fiscal Council  
VII.5
Does Portugal have in place an independent Fiscal Council (article 6(1) Directive 2011/85/EU: ‘independent bodies or bodies endowed with functional autonomy vis-à-vis the fiscal authorities of the Member States’)? What are its main characteristics? Does Portugal have to create (or adapt) a Fiscal Council in order to implement Directive 2011/85/EU?

 The Portuguese Public Finance Council (CFP). See question VII.4.

 

Regulation No 1176/2011 on the prevention and correction of macroeconomic imbalances  
(
http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:32011R1176:EN:NOT)

MEIP difficulties     
VII.6
What political/legal difficulties
did Portugal encounter and what debates have arisen, in particular about implications of the regulation for (budgetary) sovereignty, constitutional law, socio-economic fundamental rights, and the budgetary process?

In September 2011, shortly before the enactment of the abovementioned Regulation, Portugal had made a change to the law establishing the framework for the budgetary procedure ( i.e. the framework budget law cited above, see question VII.2). This naturally led to the creation of a new proposal, post-Regulation, so as to encompass the changes required by the Six-Pack.

The new proposal would end up being made only in January 2013 and approved in June 2013 (see above, question VII.2); it was heavily debated due to the inclusion of the Balanced Budget Rule (so-called ‘golden rule’): this rule provides that the structural deficit (different from the budget deficit for it excludes the impact of extraordinary measures and adjusts the indicators to the evolution of the economic cycle) may not exceed 0.5% of the GDP and the debt ratio must not exceed 60% of GDP.

 

See also question IX.4.

 

Regulation No 1175/2011 on strengthening budgetary surveillance positions    
(
http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CONSLEG:1997R1466:20111213:EN:PDF)

MTO procedure  
VII.7
What changes to the rules on the budgetary process are made to accommodate the amended Medium-term Budgetary Objective (MTO) Procedure?

The terms in which the MTO was included in the national budgetary framework result first from the goals established in the Stability and Growth Pact SGP/BDS, from the financial assistance programme obligations and later on from the inclusion of the balanced budget rule in the framework budget law.[8]

 

European semester    
VII.8
What changes have to be made to the rules and practices on the national budgetary timeline to implement the new rules on a European Semester for economic policy coordination (section 1-A, article 2-a consolidated Regulation 1466/97)?

The analysis of the impact of the European Semester in national economic policy coordination is limited by the fact that Portugal was under financial assistance. The assisted country does not have, for instance, to submit NPRs. Portugal has nonetheless produced an updated version. As a follow-up the Commission recommended pursuing the commitments “established in 2011/344/EU and detailed in the MoU”[9] – which prevail over the provisions and instruments of the European Semester.

 

Nevertheless it should be noted that both the Budget/Finance/Public Administration Parliamentary Committee and the European Affairs Committee play a prominent role in debating and issuing opinions on European Semester related instruments[10]: the NRP is debated in the European Affairs Committee; the SCP is debated in the budget/finance/Public Administration Committee; the Annual Growth Survey (AGS) is discussed in 5 different parliamentary Committees, with the European Affairs issuing the final opinion.[11]

 

MTO difficulties          
VII.9
What political/legal difficulties
did Portugal encounter and what debates have arisen, in particular about implications of the regulation for (budgetary) sovereignty, constitutional law and the budgetary process?

No political or legal difficulties were encountered nor were there debates specific to Regulation 1175/2011/EU outside the general debate on the six pack.

Respect MTO     
VII.10
How is respect of the Medium-term Budgetary Objective included in the national budgetary framework (section 1A, article 2a consolidated Regulation 1466/97)?

The medium term budgetary objective was initially incorporated through references in the framework budget law, but more specifically through the Growth and Stability Pact and the national Budgetary Strategy Documents (SGP/BSD). It is now in article 12.º C of the framework budgetary law.

Current MTO    
VII.11
What is Portugal’s current Medium-term Budgetary Objective (section 1A, article 2a consolidated Regulation 1466/97)? When will it be revised?

In the SGP/BDS of 2011-2014 (March 2011) the MTO was of 0% GDP.

 

Currently the Medium-Term budgetary objective for Portugal is to reach a structural deficit of 0.5% GDP by 2017 (year in which the structural primary balance would be circa 0.4% GDP).[12] According to the Ministry of Finance, this would require the implementation of measures resulting in approximately 2,800 million euro in 2014, 700 million euro in 2015 and 1,200 million euro in 2016. . It is expected that already in 2015 the excessive deficit can be corrected in the light of the so far achieved objectives.

 

The MTO is revised every year with the adoption of a new updated SGP/BDS. Moreover, the SGP establishes the requirement for a subsequent correction whenever deviations from the budget balance rule occur.

Adoption MTO   
VII.12
By what institution and through what procedure is Portugal’s Medium-term Budgetary Objective adopted and incorporated in the stability programme (Eurozone, article 3(2)(a) consolidated Regulation 1466/97)?

The medium term budgetary objective is adopted through the Growth and Stability Pact and the Budgetary Strategy Documents (BSD). It is also yearly included in the State Budget Law.

 

The GSP/BDS is discussed and approved in parliament. Hearings include members of government, the Economic and Social Council and the Portuguese Public Finance Council (CFP). In addition, opinions are also issued by the parliamentary committee on European affairs, the Budget/Finance/Public Administration parliamentary Committee and the Budgetary Technical Support Unit (UTAO).[13]

 

Regulation No 1177/2011 on the excessive deficit procedure
(
http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CONSLEG:1997R1467:20111213:EN:PDF)

EDP difficulties 
VII.13
What political/legal difficulties
did Portugal encounter and what debates have arisen, in particular about implications of the regulation for (budgetary) sovereignty, constitutional law and the budgetary process?

No political or legal difficulties were encountered nor were there debates specific to Regulation 1177/2011/EU outside the general debate on the six pack.


Regulation No 1173/2011 on effective enforcement of budgetary surveillance
(
http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:32011R1173:EN:NOT)
Sanctions
VII.14
What political/legal difficulties
did Portugal encounter and what debates have arisen, in particular about implications of the regulation for (budgetary) sovereignty, constitutional law and the budgetary process?

No legal or political difficulties were encountered nor did any significant debates specific to Regulation 1173/2011/EU arise outside the general debate on the six pack.

General changes
VII.15
What further changes have to be made to the rules on the budgetary process in order to comply with the Six-Pack rules?

There were no further changes to the rules on budgetary process to comply with the Six-Pack rules.

Miscellaneous
VII.16
What other information is relevant with regard to Portugal and the Six-Pack?

No other relevant information.

[1] See: http://www.ipex.eu/IPEXL-WEB/scrutiny/CNS20100276/ptass.do and

http://www.ipex.eu/IPEXL-WEB/scrutiny/COD20100281/ptass.do

[2] See http://debates.parlamento.pt/search.aspx?cid=r3.dar

[3] Written opinion of the Portuguese parliament http://www.ipex.eu/IPEXL-WEB/scrutiny/COM20120068/ptass.do

[4] See http://debates.parlamento.pt/page.aspx?cid=r3.dar&diary=s1l12sl1n95-0003&type=texto&q=six-pack&sm=p

[5] The seventh amendment to the framework budget law was published on 14th July 2013. See http://www.dgo.pt/legislacao/Paginas/default.aspx

[6] See the report of the CPF, available at: http://www.cfp.pt/wp-content/uploads/2012/11/1356109000.pdf

[7] Budgetary Framework Law http://www.en.parlamento.pt/Legislation/LeiEnquadramentoOrcamental.pdf

[8] See Documento de Estratégia Orçamental 2013-2017 (BDS) http://www.parlamento.pt/ActividadeParlamentar/Paginas/DetalheActividadeParlamentar.aspx?BID=95126&ACT_TP=PEC and the Documento de Estratégia Orçamental 2014-2018 (BDS) http://www.parlamento.pt/ActividadeParlamentar/Paginas/DetalheActividadeParlamentar.aspx?BID=97647&ACT_TP=PEC

[9] See: http://ec.europa.eu/europe2020/pdf/nd/swd2012_portugal_pt.pdf

[10] See: http://www.parlamento.pt/sites/COM/XIILEG/5COFAP/Paginas/XIIL1S_SemestreEuropeu.aspx?t=553256745a584e30636d5567525856796233426c645341794d44457a&Path=6148523063446f764c324679626d56304c334e706447567a4c31684a5355786c5a793944543030764e554e50526b46514c30467963585670646d39446232317063334e686279394562334e7a61575679637955794d46526c6253566a4d7956684d5852705932397a4a544a6d553256745a584e30636d556c4d6a424664584a76634756314c314e6c6257567a64484a6c49455631636d39775a5855674d6a41784d773d3d

[11] See: http://app.parlamento.pt/webutils/docs/doc.pdf?path=6148523063446f764c324679626d56304c334e706447567a4c31684a5355786c5a793944543030764e554e50526b46514c30467963585670646d39446232317063334e686279394562334e7a61575679637955794d46526c62634f6864476c6a62334d76553256745a584e30636d556c4d6a424664584a76634756314c314e6c6257567a64484a6c4a544977525856796233426c645355794d4449774d544d7651584e7a5a584e7a6257567564455631636d39775a574675553256745a584e305a58496c4d6a41744a5449775a584e30645752764c6e426b5a673d3d&fich=AssessmentEuropeanSemester+-+estudo.pdf&Inline=true

[12] See http://www.parlamento.pt/OrcamentoEstado/Paginas/ProgramaEstabilidadeCrescimento.aspx

[13] See: http://www.parlamento.pt/ActividadeParlamentar/Paginas/DetalheActividadeParlamentar.aspx?BID=97647&ACT_TP=PEC