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Portugal glad after Brussels scraps sanction for deficit breach

Xinhua, July 28, 2016 Adjust font size:

The Portuguese government on Wednesday endorsed Brussels' decision not to sanction Portugal for missing its deficit target last year, pointing out it was in line with the EU spirit.

"It is good news for Portugal, for Europe and for the European spirit as well as for the spirit of the EU construction," Minister of Foreign Affairs August Santos Silva said on Wednesday at a press conference at the Necessidades Palace in Lisbon.

The European Commission on Wednesday decided to avoid sanctioning both Portugal and Spain, which are defined in the Stability Pact.

Brussels was intending to impose a fine on Portugal of up to 0.2 percent of GDP, a move likely to spark anti-EU sentiment after the Brexit vote.

Following intense criticism regarding the move, Brussels decided instead to impose tough targets on Portugal, namely reducing its deficit to 2.5 percent this year.

Brussels' decision is a victory both for the government and for the opposition, Portuguese President Marcelo Rebelo de Sousa said.

"The great lesson of the day is very simple: when we, the Portuguese, unite in favor of a just cause, we win," he said during a press conference at the Palace of Belem in Lisbon.

He added that the decision to cancel sanctions for Portugal was a victory for Europe, for Portugal and for "responsibility."

"The Portuguese, who endure and endured sacrifices, are the big winners of the day," he added.

Portuguese officials have in the past months pressured Brussels not to impose a fine, pointing to the efforts carried out by the country under its 78-billion-euro bailout signed in 2011.

In a letter sent earlier this month to Brussels, Finance Minister Mario Centeno warned that the proposed sanction would have a negative effect on Portugal's support of the European project.

Portugal's Prime Minister, Antonio Costa, also pointed out that such a fine would be "unjust" and "incomprehensible."

The European Commissioner for economic and financial affairs, Pierre Moscovici, on Wednesday acknowledged such claims, pointing out that sanctions would not be understood by populations which had made sacrifices in the past years.

Portugal was expecting to see a deficit of 2.2 percent this year and the country will now have to present extraordinary measures to Brussels by Oct. 15.

The Left Bloc on Wednesday also welcomed the decision and said it was a positive step. However the party, which backs the ruling Socialist party, also said there was still another battle on the horizon, involving the possibility of Brussels suspending structural funds from the EU budget. Endit