Portugal Prime Minister, Antonio Costa.jpg
Portugal Prime Minister, Antonio Costa, delivers a speech during the debate on the State of the Nation in the parliament, Lisbon, Portugal, 07 July 2016.
Photograph: EPA/MARIO CRUZ

Portugal will not take any additional austerity measures to reduce the budget deficit despite the threat of EU sanctions, the Portuguese newspaper Publico reported Wednesday.

"There will be no extra measures," said Prime Minister Antonio Costa in the interview.

EU finance ministers gave Portugal 10 days to present arguments on why they should not be hit with fines for failing to whittle down their public deficits. Spain is also at a risk of being fined.

Member states are supposed to limit their deficits to 3 per cent of gross domestic product (GDP) under the EU's Stablility and Growth Pact, rules meant to ensure that member countries have "sound public finances and coordinate their fiscal policies."

Portugal was supposed to reach that goal last year, while Spain has until the end of 2016, but is off track. The fiscal efforts by the two former bailout recipients fell "significantly short of what was recommended," EU finance ministers said in a joint statement.

"This is about the deficit in 2015," Costa said in the report. "And we can't change anything on the 2015 deficit in 2016."

Costa warned that sanctions against Lisbon and Madrid would be "unjustified" and that their effect would be "profoundly counterproductive. Lisbon is hoping for a symbolic penalty that won't require a financial payout.

"I hope that in the end, common sense prevails," Costa said.

The two cases have left the EU walking a tightrope between credibility in applying budget rules and ensuring that its actions do not hamper the bloc's fragile economic recovery, which is already set to be battered due to British plans to leave the EU.

Related stories

Latest news

Germany's record surplus sets off debate about using extra cash

Germany's budget surplus continued to grow last year, reaching its highest level since the reunification of East and West Germany in 1990 and setting off a debate about what to do with the extra cash.

Croatian PM says gov't has no influence on appointment of Podravka managers

Prime Minister Andrej Plenkovic said on Thursday the appointment of new management board members in the Podravka food company was in the remit of the supervisory board and that neither he nor the ministers had any influence on talks at the supervisory board.

Australian archbishops call abuse probe a 'catastrophic failure'

The Australian Catholic Church's handling of a child sex abuse scandal has been a "catastrophic failure" and amounted to "criminal negligence," blasted the country's archbishops Thursday.

WHO: More than 300 million suffer from depression as world ages

The global number of people with depression has risen by 18 per cent to 322 million in the past decade, the World Health Organization (WHO) said Thursday, demanding greater attention for high-risk groups.

Ukrainian lawmaker, vocal critic of Russian government, abducted

Ukrainian lawmaker Oleksiy Honcharenko, an adamant critic of the Russian government, has been abducted by a "group of unknown people," state media reported Thursday, quoting the Odessa regional prosecutors office.

Australian ex-PM slams Netanyahu for 'torpedoing' peace process

Former Australian premier Kevin Rudd has accused Israeli leader Benjamin Netanyahu of "torpedoing" peace negotiations in the Middle East.

Weekly "Novosti" dismisses NGO's accusations

The newspaper today also dismissed all accusations the NGO presented at a recent news conference, and retorted that the NGO's criticism were ill-intended and untrue accusations.

Sixteen killed in fighting between army and rebels in Congo

Sixteen fighters from the reactivated Congolese rebel movement M23 have been killed during two days of fighting with the army in the east of the country, a military spokesman said Thursday.

Maltese FM on behalf of EU calls for preservation of stability in BiH

Maltese Foreign Minister George Vella said in Sarajevo on Thursday that his country, as the current chair of the European Union, closely followed the developments in Bosnia and Herzegovina (BiH) and other parts of the Western Balkans.

Croatia-Hungary committee on minorities meets after four-year hiatus

The Croatia-Hungary Intergovernmental Committee for the implementation of the agreement on the protection of the rights of the respective ethnic minorities met in Zagreb on Thursday after a four-year hiatus.

Syrian rebels claim full control of al-Bab, defeating IS

Syrian rebels backed by Turkey said Thursday they are fully in control of al-Bab, wresting it from Islamic State after a military campaign that began in November and cost hundreds of lives.

HURS says Croatia fails to create conditions for long-term growth

The Croatian Association of Workers' Trade Unions (HURS) warned on Thursday that a report which the European Commission released on Wednesday showed that Croatia had failed to create conditions for a long-term economic growth, adding that the situation in the Podravka food company suggested the continuation of the trend of shutting down jobs in the production sector.