Thursday, March 11, 2010
The Organization for Economic Cooperation and Development (OECD) has welcomed Portugal’s fiscal consolidation plan, emphasizing that it will serve to support growth.
Determined to consolidate its budget, and to bring the budget deficit below 3% of GDP by 2013 (from 9.3% in 2009), Portugal recently announced its fiscal consolidation strategy, which seeks to achieve its consolidation goals through a combination of expenditure restraint and revenue-raising initiatives. Measures to raise revenue include some broadening of social security contributions and personal income tax, while by and large maintaining current rates.
The OECD has praised Portugal’s consolidation strategy, emphasizing that efforts to make the tax system more broad-based and to minimize any negative impact of fiscal consolidation on potential economic growth are welcome. According to the OECD, the strategy “goes in the direction of maintaining market confidence, supporting growth and ensuring fiscal sustainability”.
The OECD noted that the Portuguese authorities are encouraged to implement their consolidation strategy, underpinned by the Stability and Growth Programme to be finalized later this month, within a pluriannual budgeting framework supported by expenditure ceilings.