Legal provisions of COM(2014)55 - Amendment of Implementing Decision 2011/344/EU on granting Union financial assistance to Portugal - Main contents
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| dossier | COM(2014)55 - Amendment of Implementing Decision 2011/344/EU on granting Union financial assistance to Portugal. |
|---|---|
| document | COM(2014)55  |
| date | February 18, 2014 |
Article 1
‘8. Portugal shall adopt the following measures during 2014, in line with specifications in the Memorandum of Understanding:
| (a) | the general government deficit shall not exceed 4 % of GDP in 2014. For the calculation of this deficit, the possible budgetary costs of bank support measures in the context of the government's financial sector strategy shall not be taken into account. To achieve this objective Portugal shall deliver consolidation measures worth 2,3 % of GDP as defined in the 2014 Budget Law and supporting legislation adopted with this aim; |
| (b) | beyond the currently adopted pension measures, the existing pension legislation of the civil servants' pension regime CGA shall be modified by the end of January 2014 to ensure that the new rules on the sustainability factor and thus the increased retirement age also apply effectively to this regime; Portugal shall also develop new comprehensive measures as part of the ongoing structural reform of pensions in the course of 2014 with a view to ensuring their sustainability whilst strengthening equity principles; |
| (c) | to control for potential expenditure slippages, the government shall closely monitor the respect of the ministerial expenditure ceilings through monthly reporting to the Council of Ministers; |
| (d) | Portugal shall swiftly define and implement the envisaged changes in survivors' pensions eligibility conditions as well as the conditions for the sale of online gamblig licences. In addition, Portugal shall make decisive steps to implement the sale of the port concessions; |
| (e) | the comprehensive reform of the corporate income tax shall be implemented within the existing budgetary envelope to respect the fiscal consolidation targets; |
| (f) | the standstill rule for tax expenditures at central, regional or local level shall be maintained. Efforts to fight tax evasion and fraud for various types of taxes shall be further strengthened, inter alia, by the monitoring of the new e-invoicing system. A study on the shadow economy in the housing market shall be carried out in the first quarter of 2014 with a view to seeking ways to reduce rental tax evasion; |
| (g) | should adverse legal or other budgetary execution risks materialise, Portugal shall implement compensatory measures of high quality in order to meet the deficit target; |
| (h) | beyond 2014, Portugal shall achieve a general government deficit of no more than 2,5 % of GDP in 2015 and stop the accumulation of domestic arrears. The strategy to achieve the target shall be underpinned by the Reform of the State document which focuses on social security sustainability, public administration reform, greater efficiency in health and education and environmental taxation. Broad-based consultations with political and social partners to advance and define reforms are ongoing. The progress in this process shall be analysed at the eleventh review and identified measures shall be reflected in the 2014 Fiscal Strategy Document. In order to comply with the Union budgetary framework requirements, that document shall also provide details of the medium-term budgetary plans; |
| (i) | Portugal shall take additional measures to further strengthen its Public Financial Management system. Budget fragmentation shall be reduced by limiting the number of budget entities and reviewing the classification of own revenues. The strategy for the validation and settlement of arrears shall continue to be applied and the commitment control law fully enforced in all public entities to prevent the creation of new arrears. Portugal shall review the Budget Framework Law (BFL) to fully transpose the relevant Union legislation. In addition, Portugal shall carry out a more comprehensive revision of the BFL to streamline the budget appropriation structure, to strengthen accountability and to further anchor public finances in a medium-term framework. Portugal shall ensure that the measures to implement the new budgetary framework at central government level shall also be applied at regional and local level; |
| (j) | Portugal shall continue the reform agenda towards a modern and more efficient revenue administration in line with international best practises. Portugal shall reduce the number of municipal tax offices by at least 25 % in the first quarter of 2014 and by a further 25 % by May 2014. The number of resources devoted to auditing in the tax administration shall increase by at least 30 % of the total staff. A new Taxpayer Services Department, unifying various services for taxpayers, shall be created within the tax administration. The Risk Management Unit shall be fully operational in the first quarter of 2014, focusing initially on targeted projects to improve compliance of self-employed professionals and high net wealth individuals. The tax compliance situation shall be continuously monitored; |
| (k) | Portugal shall continue implementing reforms of the public administration. Following the comprehensive review of wage scales in the public administration by the twelfth review, a single wage scale aimed at the rationalisation and consistency of remuneration policy across all careers shall be developed in the first half of 2014 and finalised by the end of 2014. This shall replace the wage revision included in the 2014 Budget Law. In addition, following the survey on cash supplements, Portugal shall prepare a report on the comprehensive reform of wage supplements. Draft legislation for a single supplement scale shall be presented by the twelfth review; |
| (l) | Portugal shall complete the implementation of the strategy of shared services in public administration; |
| (m) | Portugal shall fully implement the new legal and institutional PPPs framework. Renegotiations of PPPs shall proceed in various sectors in order to contain their budget impact. Following the new SOEs framework law and in line with the Ministry of Finance's enhanced shareholder role, a Technical Unit for the monitoring of SOEs shall be created. The government shall continue its comprehensive restructuring programme of SOEs with a view to reaching a sustainable operational balance. The Portuguese government shall continue with the privatisations already in the pipeline; |
| (n) | Portugal shall present a report with the following objectives:
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| (o) | Portugal shall ensure efficiency and effectiveness in the health care system by continuing with the rational use of services and the control of expendiures, reducing public spending on pharmaceuticals and eliminating arrears; |
| (p) | Portugal shall continue the reorganisation and rationalisation of the hospital network through specialisation, concentration and downsizing of hospital services, joint management and joint operation of hospitals, and ensure the implementation of the multi-year action plan for hospital reorganisation; |
| (q) | following the adoption of the amendments to the Law 6/2006 on new urban leases and the decree law which simplifies the administrative procedure for renovations, Portugal shall undertake a comprehensive review of the functioning of the housing market; |
| (r) | while respecting the Constitutional Court's ruling of 20 September 2013, Portugal shall devise and implement alternative options for a labour market reform with similar effects; |
| (s) | Portugal shall promote wage developments which are consistent with the objectives of fostering job creation and improving firms' competitiveness with a view to correcting macroeconomic imbalances. Over the Programme period, any increase in minimum wages shall take place only if justified by economic and labour market developments; |
| (t) | Portugal shall continue to improve the effectiveness of its active labour market policies in line with the results of the assessment report and the action plan to improve the functioning of the public employment services; |
| (u) | Portugal shall continue to implement the measures set out in its action plans to improve the quality of secondary and vocational education and training; in particular the government shall present plans to make the funding framework of schools more effective and the professional schools of reference shall be established; |
| (v) | Portugal shall complete the adoption of the outstanding sectorial amendments necessary to fully implement Directive 2006/123/EC of the European Parliament and of the Council (*); |
| (w) | Portugal shall improve the business environment by completing pending reforms on the reduction of administrative burden (fully operational Points of Single Contact provided for by Directive 2006/123/EC and “Zero Authorisation” projects) and by converging the characteristics of regulated professions to the relevant Union directives and by carrying out further simplification of existing licensing procedures, regulations and other administrative burdens in the economy which are a major obstacle for the development of economic activities; |
| (x) | Portugal shall complete the reform of the ports' governance system, including the overhaul of port operation concessions; |
| (y) | Portugal shall implement measures enhancing the functioning of the transport system; |
| (z) | Portugal shall continue to implement the transposition of the EU Railway Packages; |
| (aa) | Portugal shall implement a plan to create an independent gas and electricity logistics operator company; |
| (ab) | Portugal shall implement adequate measures to eliminate the energy tariff debt and to ensure the sustainability of the national electricity system; |
| (ac) | the government shall submit to the Portuguese Parliament the professional bodies' amended statutes; |
| (ad) | Portugal shall approve the corresponding amendments to the bylaws of the National Regulatory Authorities; |
| (ae) | Portugal shall continue to eliminate barriers to entry, soften existing authorisation requirements and reduce administrative burden in the services sector; |
| (af) | Portugal shall publish quarterly reports on recovery rates; duration and costs of corporate insolvency cases; duration and cost of tax cases and on the clearance rate of enforcement court cases; |
| (ag) | Portugal shall adopt the Construction Laws and the other sectorial amendments to fully implement the Directive 2006/123/EC; |
| (ah) | Portugal shall assess the impact of the optional VAT cash accounting regime; |
| (ai) | Portugal shall carry out an inventory and an analysis of the cost of regulations that are likely to have a higher impact on economic activity. |
9. With a view to restoring confidence in the financial sector, Portugal shall aim to maintain an adequate level of capital in its banking sector and ensure an orderly deleveraging process in compliance with the deadlines set in the Memorandum of Understanding. In that regard, Portugal shall implement the strategy for the portuguese banking sector agreed with the Commission, the ECB and the IMF so that financial stability is preserved. In particular, Portugal shall:
| (a) | monitor the banks' transition to the new capital rules as laid down in the Capital Requirements Directive IV package (CRD IV) and ensure that capital buffers remain commensurate with the challenging operating environment; |
| (b) | advise banks to strengthen their collateral buffers on a sustainable basis; |
| (c) | remain committed to providing further support to the banking system, if needed, encouraging banks to seek private solutions while resources from the Bank Solvency Support Facility (BSSF) are available in line with the recently amended Union's State aid rules to further support viable banks, subject to strict conditionality; |
| (d) | ensure a balanced and orderly deleveraging of the banking sector, which remains critical in permanently eliminating funding imbalances and reducing the reliance on Eurosystem funding in the medium-term. Banks funding and capital plans shall be reviewed quarterly; |
| (e) | continue to strengthen the supervisory organisation of the Banco de Portugal (BdP), optimise its supervisory processes and develop and implement new supervisory methodologies and tools. The BdP will revise the standards on non-performing loans in order to achieve convergence with the criteria included in the relevant EBA technical standard in line with the timeframe set at the Union level; |
| (f) | continue to monitor on a quarterly basis the banks' potential capital needs with a forward looking approach under stress conditions including through the integration of the new top-down stress testing framework into the quality assurance process, which allows for a review of the key drivers of the results; |
| (g) | continue to streamline the state-owned Caixa Geral de Depósitos (CGD) group; |
| (h) | outsource the management of the Banco Português de Negócios (BPN) credits currently held by Parvalorem to the firms selected through the bidding process with a mandate to gradually recover the assets; and ensure the timely disposal of the subsidiaries of, and the assets in, the other two state-owned special purpose vehicles; |
| (i) | analyse banks' recovery plans and issue guidelines to the system on recovery plans in line with the relevant (draft) EBA technical standards and the forthcoming Union Directive on the recovery and resolution of credit institutions, and prepare resolution plans on the basis of the reports submitted by the banks; |
| (j) | finalise the implementation of the framework for financial institutions to engage in out-of-court debt restructuring for households and smoothen the application of the framework for restructuring of corporate debt; |
| (k) | prepare quarterly reports on the implementation of the new restructuring tools; on the basis of the recently conducted survey, explore alternatives in order to increase the successful recovery of companies adhering to the Special Revitalisation Procedure for companies in serious financial distress (PER) and the Companies' Recovery System through Extrajudicial Agreements for companies in a difficult economic situation or imminent or actual insolvency (SIREVE); |
| (l) | continue the monitoring of the high indebtedness of the corporate and household sectors through quarterly reports and of the implementation of the new debt restructuring framework to ensure that it is working as effectively as possible; |
| (m) | encourage, on the basis of the proposals already made, the diversification of financing alternatives to the corporate sector, develop and implement solutions that provide financing alternatives to traditional bank credit for the corporate sector through an array of measures aiming to improve their access to the capital markets; |
| (n) | improve the performance and governance of the existing government-sponsored credit lines building on the results of the recent external audit. Implement the recently revised roadmap for improving the governance of the National Guarantee System (NGS) and making these schemes more efficient while minimising risks for the State; |
| (o) | establish a development financial institution (DFI) aiming at streamlining and centralising the management of the reimbursable part of the financial instruments of Union structural funds for the 2014-2020 programming period. The institution shall neither accept deposits or other repayable funds from the public nor engage in direct lending. |