PORTUGAL - Portugal has less then a week to go before the European Commission follows up the early warning given to the country over its failure to meet budgetary targets, including the reform of its pension system.
The EC urged the Portuguese government to complete its process of pension reform as part of its economic stability programme.
But a recent update by the Commission showed that Portugal had failed to meet its GDP deficit target of 1.1%, posting a 2.2% deficit figure for 2001. The EC said that despite global economic slowdown accounting for part of the slump, Portugal remained “vulnerable” in the short term.
Brussels is expected to follow up its earlier warning with another on February 12. There is 3% deficit of GDP threshold set down by the EC’s Stability and Growth Pact.
According to the EC, increased public spending due to an ageing population, and the subsequent slow decline in the debt ratio, remains a source of concern for Portugal. Brussels said that it welcomed the country’s recently agreed pension reform as part of its structural reforms. But one of Portugal’s major challenges now was to finalise the process in order to move onto other problems, such as the health care sector.
By Madhu Kalia
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