French finance minister talks down EU fiscal penalties on Portugal | News | DW | 11.07.2016
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French finance minister talks down EU fiscal penalties on Portugal

France's Finance Minister Michel Sapin believes Portugal doesn't deserve EU penalties for fiscal overruns. This precedes a meeting of the bloc's finance ministers at which Lisbon and Madrid may see penalties imposed.

"Portugal has made enormous efforts in the past years. It does not deserve excessive discipline," Sapin said in Paris on Monday ahead of a meeting of EU finance ministers in Brussels.

France itself has repeatedly benefitted from EU leniency over its own breaches of the bloc's public finance rules.

The European Commission began formal disciplinary procedures against Portugal and Spain last week over excessive deficits in 2014 and 2015, and EU finance ministers will make a decision based on the executive's recommendation at a meeting on Tuesday.

"Certainly the [European] Commission is within its rights and perhaps even its duty when it points out that Portugal has not respected its commitments" to stay within EU deficit guidelines, Sapin said.

However, Sapin also said that Lisbon had been battling "extremely violent" economic headwinds in recent years marked by austerity, saying that its deficit problem had stemmed in part from a state bailout of Banif bank last December.

The commission last Thursday officially declared Spain and Portugal - both under the EU's excessive deficit procedure since 2009 because of recurrent fiscal holes following the global financial crisis - in violation of EU public borrowing rules. That is the first step towards what would be penalties against bloc members.

Germany, among other EU states, has long called for the commission to crack down on excessive borrowers.

The commission is entitled to impose fines of up to 0.2 percent of GDP on eurozone countries that repeatedly breach the rules.

Portuguese Prime Minister Antonio Costa warned last week that Brussels would only embolden euroskepticism if Brussels applies sanctions.

Spain last year reported a deficit of 5.1 percent of GDP, missing the target of 4.2 percent set by the commission and the normal 3.0 percent limit. Portugal has long been considered a star reformer, having sharply cut its budget deficit from close to 10 percent of GDP in 2010 to 4.4 percent last year.

jbh/msh (AFP, Reuters)