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Official Journal of the European Union
26.1.2013
DECISIONS
COUNCIL IMPLEMENTING DECISION
of 20 December 2012
amending Implementing Decision 2011/344/EU on granting Union financial assistance to Portugal
(2013/64/EU)
THE COUNCIL OF THE EUROPEAN UNION,
targets. Additional saving measures worth around 0,3 %
of GDP are being implemented to meet the deficit target,
but there are some uncertainties with regard to their final
yield. Finally, the statistical authorities are still assessing
Having regard to the Treaty on the Functioning of the European
whether the sale of the airport concession (ANA),
Union,
estimated at 0,7 % of GDP, can be treated as a deficit-
reducing operation.
Having regard to Council Regulation (EU) No 407/2010 of
11 May 2010 establishing a European financial stabilisation
mechanism ( 1 ), and in particular Article 3(2) thereof,
(4) The
2013
budget
law,
which
was
adopted
on
27 November 2012, includes discretionary measures of
more than 3 % of GDP to achieve the deficit target of
Having regard to the proposal from the European Commission,
4,5 % of GDP in 2013. On the expenditure side, the
budget envisages a sizeable reduction in the public
sector wage bill through lower employment coupled
Whereas:
with a reduction in overtime payments and other
compensations. Rationalisation efforts in the health
sector, state-owned enterprises (SOEs) and public-private
partnerships (PPPs) will be deepened, while social
(1) In
line
with
Article
3(10)
of
Council
Implementing
spending will be further streamlined. On the revenue
Decision 2011/344/EU ( 2 ), the Commission, together
side, the 2013 budget provides for a comprehensive
with the International Monetary Fund (IMF) and in
restructuring of the personal income tax that will
liaison with the European Central Bank (ECB), has
reduce the number of brackets and increase the average
conducted the sixth review of the Portuguese authorities’
tax rate in line with European standards, while preserving
progress on the implementation of the agreed measures
progressivity and curbing tax benefits. In addition, a
under the economic and financial adjustment programme
surcharge of 3,5 % will be imposed on the part of
(‘Programme’) as well as of their effectiveness and
taxable income above the minimum wage and a soli
economic and social impact.
darity surcharge of 2,5 % on income above EUR
80 000 and of 5 % on income above EUR 250 000.
Corporate income tax revenues will be increased by
(2)
After a strong decline of 3 % in 2012 in real terms,
means of limiting the deductibility of interest costs,
economic activity is expected to gradually recover
reducing the threshold for applying the highest
starting from the second half of 2013 with quarterly
surcharge on profits and changing the methodology for
growth rates returning to positive territory. Looking
special prepayment to companies under group taxation,
forward, the economic recovery is expected to gather
among others. The 2013 budget also includes changes in
pace in 2014 despite risks to the macroeconomic
indirect taxation, in particular an increase in excise taxes
outlook. This includes potential headwinds from
on tobacco, alcohol and natural gas, a broadening of the
domestic consumption and a stronger-than-expected
base of property taxation after a revaluation of prop
deterioration of the economic climate in some euro
erties, and the creation of a financial transaction tax. In
area Member States, which could have spill-over effects
addition, social contributions will rise as they will also be
on Portugal.
charged on supplementary payments for public
employees and on unemployment benefits.
(3) The
5
%
of
gross
domestic
product
(GDP)
budget
deficit
target for 2012 remains valid, even though there are
some risks. While the budgetary execution on the expen
(5) Taking
into
account
the
measures
in
the
2013
budget,
diture side remains under control, revenues until October
revenue increases will contribute by 80 % to the fiscal
continued to fall short of already downward revised
adjustment in 2013 while the remaining 20 % will come
from expenditure reductions (after considering the effect
( 1 ) OJ L 118, 12.5.2010, p. 1.
of the reinstatement of the 13th salary in the public
( 2 ) OJ L 159, 17.6.2011, p. 88.
sector and 1,1 monthly pensions, following the

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26.1.2013 Official
Journal
of
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European
Union L
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decision of the Constitutional Court). In view of the risks
will likely be met with some banks already below the
associated with the strongly revenue-based adjustment,
threshold at this stage. Efforts to diversify the sources of
the Portuguese authorities are preparing contingency
funding for the corporate sector are being strengthened.
measures amounting to 0,5 % of GDP which will be
The legal acts on bank resolution, including recovery
activated if risks materialise. The measures will mainly
plans, bridge banks and a resolution fund, are being
consist of expenditure savings, in particular further
finalised.
reductions in payroll costs, and will be further specified
in early 2013 in time for the seventh review.
(10) Further
progress
has
been
made
in
implementing
growth
and competitiveness enhancing structural reforms. In
(6) The
budgetary
adjustment
process
is
underpinned
by
a
addition to strengthening active labour market policies,
range of structural measures to enhance control over
the authorities are committed to reducing severance
government expenditure and improve revenue collection.
payments in order to promote labour market flexibility
In particular, a comprehensive reform of the budgetary
and job creation. The implementation of the action plans
framework is provided for to bring it in line with best
on secondary school and vocational training is overall
practices in budgetary procedures and management. The
progressing as scheduled.
new commitment control system is starting to show
results but implementation needs to be monitored
closely in order to ensure that commitments are in line
(11) The transposition of Directive 2006/123/EC of the
with funding. Reforms in the public administration,
European Parliament and of the Council of 12 December
which have already produced significant savings, will
2006 on services in the internal market ( 1 ) aiming at
continue. Key reforms to restructure the revenue admin
reducing barriers to entry and boosting competition
istration are close to completion and the authorities are
and economic activity, by facilitating access for new
enhancing monitoring and strengthening revenue
entrants to the market in the different economic
compliance. The renegotiation of PPPs has started and
regimes, is proceeding at good pace. Licensing procedures
significant savings are projected for 2013 and beyond.
and other administrative burdens are also being
SOEs are expected to reach operational balance on
simplified in different economic sectors such as
average by the end of 2012. Reforms in the health
environment and territorial planning, agriculture and
care sector are producing significant savings and imple
rural development, industry, and geology. A framework
mentation is continuing broadly in line with targets.
law to set the main principles of the functioning of the
most important national regulator authorities, including
their endowment with strong independence and
(7) A
comprehensive
expenditure
review
has
been
initiated
autonomy, is under preparation.
with the objective of enhancing the efficiency and equity
of public services, while generating spending savings of
about EUR 4 billion or 2,5 % of GDP. The exercise aims
(12) Reforms
of the judicial
system continue to advance
at reducing redundancies across the public sector
according to the agreed schedule. Further progress has
functions and entities, and reallocating resources toward
been achieved on the reduction of backlog cases and
growth-friendly spending areas. The identification, quan
broader reforms such as the geographical reorganisation
tification and timetable of the implementation of the
of the court districts and the reform of the Code of Civil
measures should be specified by February 2013. The
Procedure.
2013 Stability Programme will provide further
information on the medium-term fiscal consolidation
(13) Each
measure
required
by
this
Decision
is
instrumental
in
plan.
re-establishing a sound economic and financial situation
in Portugal and restoring its capacity to finance itself on
(8) Under
the
Commission’s
current
projections
for
nominal
the markets.
GDP growth (– 1,0 % in 2011, – 2,7 % in 2012, 0,3 % in
2013 and 2 % in 2014) and the fiscal targets of 5 % of
(14) In the light of these developments, Implementing
GDP in 2012, 4,5 % in 2013 and 2,5 % in 2014, the
Decision 2011/344/EU should be amended,
debt-to-GDP ratio is expected to develop as follows:
108,1 % in 2011, 120 % in 2012, 122,2 % in 2013
and 122,3 % in 2014. The debt-to-GDP ratio would
HAS ADOPTED THIS DECISION:
level off from 2012 onwards and be placed on a
downward path after 2014, assuming further progress
in the reduction of the deficit. Debt dynamics are
Article 1
affected by several below-the-line operations, including
Article 3 of Implementing Decision 2011/344/EU is hereby
sizeable acquisitions of financial assets, in particular for
amended as follows:
possible bank recapitalisation and financing to SOEs and
differences between accrued and cash interest payments.
(1) paragraph 7 is replaced by the following:
(9) The
capital
augmentation
exercise
amounting
to
EUR
8,2 billion is nearly completed and will allow the
‘7. Portugal
shall
adopt
the
following
measures
during
participant banks to meet the European Banking
2013, in line with specifications in the Memorandum of
Authority regulatory capital buffers as well as the end-
Understanding:
of-year target for 2012 of a Core Tier 1 ratio of 10 %.
The indicative loan-to-deposit target of 120 % by 2014
( 1 ) OJ L 376, 27.12.2006, p. 36.

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Official Journal of the European Union
26.1.2013
(a) The general government deficit shall not exceed 4,5
%
(j) Portugal shall develop a nationwide land registration
of GDP in 2013. The 2013 budget shall include
system to allow a more equal distribution of benefits
permanent consolidation measures of at least 3 % of
and costs in the execution of urban planning.
GDP aiming at reducing the general government
deficit within the timeframe referred to in paragraph
(k) Portugal shall make fully operational the management
3. The Portuguese Government shall explore ways to
tool to analyse, monitor and assess the results and
increase the weight of expenditure reduction in the
impacts of education and training policies and shall
overall consolidation package for 2013 in order to
establish the professional schools of reference.
ensure a medium-term growth-friendly fiscal
adjustment tilted towards the expenditure side. Given
budgetary execution risks, the Portuguese Government
(l) Portugal shall complete the adoption of the outstanding
shall prepare contingency measures of 0,5 % of GDP by
sectorial amendments necessary to fully implement
early 2013 which should be activated in case of a
Directive 2006/123/EC of the European Parliament
materialisation of such risks.
and of the Council of 12 December 2006 on services
in the internal market (*).
(b) The 2013 budget shall include revenue measures, in
particular restructuring the personal income tax by
(m) Portugal shall implement targeted measures to achieve
simplifying the tax structure, increasing the average
a steady reduction of the backlogged enforcement cases
tax rate while preserving progressivity and broadening
with a view to resolving the backlog of court cases.
the tax base through the elimination of some tax
benefits; broadening the corporate income tax base;
(n) Portugal shall adopt the framework Law on the main
increasing the investment income tax rate; increasing
national regulator authorities in order to guarantee
excise taxes; and introducing changes in recurrent
their full independence and financial, administrative
property taxation.
and management autonomy.
(c) The 2013 budget shall include expenditure-saving
(o) Portugal shall improve the business environment by
measures, in particular rationalising public adminis
completing pending reforms on the reduction of the
tration, education, healthcare and social benefits;
administrative burden (Points of Single Contact
reducing the wage bill by decreasing permanent and
provided for by Directive 2006/123/EC and “Zero
temporary staff and reducing overtime pay; stream
Authorisation” projects) and by carrying out further
lining public and private social transfers and subsidies;
simplification of existing licensing procedures, regu
reducing transfers to local and regional authorities; and
lations and other administrative burdens in the
lowering operational and capital expenditures by SOEs.
economy which are a major obstacle for the devel
opment of economic activities.
(d) Portugal shall continue implementing its privatisation
programme.
(p) Portugal shall complete the reform of the port work
legislation and the ports’ governance system, including
(e) Portugal shall develop common revenue forecasting
the overhaul of port operation concessions.
guidelines for regional and local authorities.
(q) Portugal shall implement the measures enhancing the
(f) Portugal shall deepen the use of shared services in
functioning of the transport system.
public administration.
(r) Portugal shall implement the measures eliminating the
(g) Portugal shall reduce the number of local branches of
energy tariff debt and fully transpose the Third EU
line ministries (e.g. tax, social security, justice) by
Energy Package.
merging them into the “Lojas do Cidado” (adminis
tration and utilities single points of contact) and
___________
developing further the e-administration over the
duration of the Programme.
(*) OJ L 376, 27.12.2006, p. 36.’;
(h) Portugal shall continue the reorganisation and rational
isation of the hospital network through specialisation,
(2) paragraph 9 is replaced by the following:
concentration and downsizing of hospital services, joint
management and joint operation of hospitals, and shall
‘9. With
a
view
to
restoring
confidence
in
the
financial
finalise the implementation of the action plan by the
sector, Portugal shall adequately recapitalise its banking
end of 2013.
sector and ensure an orderly deleveraging process. In that
regard, Portugal shall implement the strategy for the
(i) With the support of internationally-renowned experts
Portuguese banking sector agreed with the Commission,
and following the adoption of the amendments to Law
the ECB and the IMF so that financial stability is preserved.
6/2006 on New Urban Lease and of the decree law
In particular, Portugal shall:
which simplifies the administrative procedure for reno
vation, Portugal shall undertake a comprehensive
(a) advise banks to strengthen their collateral buffers on a
review of the functioning of the housing market.
sustainable basis;

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26.1.2013 Official
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(b) ensure a balanced and orderly deleveraging of the
(g) ensure the initial and periodical funding arrangements
banking sector, which remains critical in permanently
for the Resolution Fund in two steps, first by the
eliminating funding imbalances. Banks’ funding plans
approval of a decree-law on the banks’ contributions
aim at reducing the loan-to-deposit ratio to an indicative
to the Resolution Fund, and secondly by the approval
value of approximately 120 % in 2014 and reducing the
of a supervisory notice on the specific periodic
reliance on Eurosystem funding in the medium term.
contributions by banks; adopt the supervisory notices
Those funding plans shall be reviewed quarterly;
on the resolution plans; and prioritise, in the implemen
tation of the recovery and resolution plans of banks,
(c) encourage the diversification of financing alternatives
those banks that are of systemic importance;
for the corporate sector, and in particular the SMEs,
through an array of measures aiming at improving
their access to the capital markets and export credit
(h) implement the framework for financial institutions to
insurance;
engage in out-of-court debt restructuring for house
holds, smooth the application for restructuring of
(d) continue to streamline the state-owned CGD group;
corporate debt, and implement an action plan to raise
public awareness of the restructuring tools;
(e) optimise the process for recovering the assets trans
ferred from BPN to the three state-owned special
(i) submit to Parliament amendments to the legal
purpose vehicles through the outsourcing to a profes
framework governing access to public capital to allow
sional third party of the management of the assets, with
the State, under strict circumstances and in accordance
a mandate to gradually recover the assets over time;
with State aid rules, to exercise control over an insti
select the party managing the credits through a
tution and to perform mandatory recapitalisations.’.
competitive bidding process and include adequate
incentives to maximise the recoveries and minimise
operational costs into the mandate; and ensure timely
Article 2
disposal of the subsidiaries and the assets in the other
two state-owned special purpose vehicles;
This Decision is addressed to the Portuguese Republic.
(f) on the basis of the set of preliminary proposals to
encourage the diversification of financing alternatives
to the corporate sector presented, develop and
Done at Brussels, 20 December 2012.
implement solutions that provide financing alternatives
to traditional bank credit for the corporate sector; and
assess the effectiveness of government-sponsored export
For the Council
credit insurance schemes with a view to taking appro
priate measures compatible with Union law to promote
The President
exports;
S. ALETRARIS

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