Bank recapitalization sends Portuguese deficit soaring

LISBON, March 26 (Xinhua) -- The National Statistics Institute (INE) unexpectedly included the Portuguese state's 3.9 billion euros recapitalization of Caixa Geral de Depositos (CGD) bank in 2017 deficit figures published on Monday.

Without the recapitalization, Portugal registered a deficit of 0.9 percent of GDP in 2017, a record low.

But with it, the deficit came in at 3 percent, a jump up from the 2 percent recorded in 2016 and a trigger level for the launch of European Union (EU) Excessive Deficit Procedures.

Mario Centeno, Portugal's finance minister, criticized the methodology used by the INE, as stipulated by Eurostat, the European Union's umbrella statistical association.

"Eurostat advocates recording the recapitalization of CGD in the deficit and that's wrong," Centeno told a press conference in Lisbon. "It goes against the decision reached by the European Commission, against European treaties and it does not properly reflect that this was an investment in CGD made by its shareholder, the Portuguese state."

Centeno is essentially arguing that the 3.9 billion euros paid out in early 2017 should count as shareholder investment and not state aid.

But the INE is sticking to its own criteria and says it will submit an Excessive Deficit Procedure notification to Eurostat by the end of next month. According to EU rules, any member state running up a deficit of 3 percent or more is subjected to monitoring. Portugal last exited the Excessive Deficit Procedure program in May 2017. (1 euro = 1.24 U.S. dollars) Enditem