The Member States of the European Union (EU) have supported ridding Spain and Portugal of the fine for diversion of the deficit as proposed by the European Commission (EC), it reported yesterday by the Council of the EU.
the EU countries had until midnight Monday to rule, but in the absence of opposition the proposal by the EU executive to cancel the sanction has been automatically adopted.
members of Spain have also supported the new fiscal path raised by the EC, which provides two additional years to the country, until 2018, to correct the deficit, in exchange for an effort of more than 10,000 million euros.
Spain will have to reduce its deficit of 5.1% of current GDP (with aid to banks) to 4.6% this year, to 3.1% in 2017 and 2.2% in 2018.
Portugal, meanwhile, receives an additional year to lower the deficit of 4.4% of GDP in 2015 to 2.5% this same exercise.
the EU does not require new measures to Spain this year, so all the burden of adjustment falls in 2017 2018 0.5% of GDP in each year, ie more than 10,000 million euros.
for 2017 and 2018, the document on the new fiscal path, the partners of Spain collected the recommendation of the EC that Madrid reduce the number and scope of tax expenditures, including reduced rates of VAT, introduce greater automaticity in the implementation of the Stability Law and improve transparency in public procurement.
further suggest that Spain explicitly ask government noncompliant to compensate for deviations spending the year after they occur.
the decision also reflects that Spain will quarterly supervised by their members.
in addition to having to prove the Oct. 15 if you have taken effective measures to correct the deficit and submit the draft budget for 2017 to the EC, Madrid shall submit to the Commission and its partners a first report on 15 January next year and thereafter each quarter.
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‘The decision also reflects that Spain will be supervised quarterly by their partners’.
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