Council Implementing Decision of 21 June 2013 amending Implementing Decision 2011/344/EU on granting Union financial assistance to Portugal (2013/323/EU)

Article 1 U.K.

Implementing Decision 2011/344/EU is hereby amended as follows:

(1)

Article 1 is amended as follows:

(a)

Paragraph 1 is replaced by the following:

'1. The Union shall make available to Portugal a loan amounting to a maximum of EUR 26 billion, with a maximum average maturity of 19,5 years. The maturity of individual tranches of the loan facility may be of up to 30 years.';

(b)

The following paragraph is added:

'9. At the request of Portugal, the Commission may extend the maturity of an instalment or a tranche, provided that the maximum average maturity as set out in paragraph 1 is respected. The Commission may refinance all or part of its borrowing for that purpose. Any amounts borrowed in advance shall be kept on an account with the ECB that the Commission has opened for the administration of the financial assistance.'

(2)

Article 3 is amended as follows:

(a)

Paragraphs 3 and 4 are replaced by the following:

'3. The general government deficit shall not exceed 5,9 % of GDP in 2011, 5,0 % of GDP in 2012, 5,5 % of GDP in 2013 and 4 % of GDP in 2014. For the calculation of this deficit, the possible budgetary costs of bank support measures in the context of the Government's financial sector strategy shall not be taken into account. The budgetary consolidation shall be achieved by means of high-quality permanent measures and minimising the impact of consolidation on vulnerable groups.

4. Portugal shall adopt the measures specified in paragraphs 5 to 8 before the end of the indicated year, with exact deadlines for the years 2011-2014 being specified in the Memorandum of Understanding. Portugal shall stand ready to take additional consolidation measures to achieve the deficit targets throughout the Programme period.';

(b)

Paragraphs 7 to 9 are replaced by the following:

'7. Portugal shall adopt the following measures during 2013, in line with specifications in the Memorandum of Understanding:

(a) The general government deficit shall not exceed 5,5 % of GDP in 2013. The consolidation measures included in the 2013 budget, including in the supplementary budget submitted to the Parliament by end-May, shall be implemented throughout the year. Revenue-raising measures shall include a reform of the personal income tax that simplifies the tax structure, broadens the tax base through the elimination of some tax benefits and increases the average tax rate, while preserving progressivity; a broadening of the corporate income tax base; an increase in excise taxes and in recurrent property taxation and a extraordinary solidarity contribution on pensions. Expenditure-saving measures shall include a rationalisation of public administration, education, healthcare and social benefits; a reduction of the wage bill by decreasing permanent and temporary staff and reducing overtime pay; a lowering of operational and capital expenditures by SOEs; renegotiations of contracts with PPPs; and cutbacks in intermediate consumption across line ministries;

(b) Some of the measures resulting from the public expenditure review shall be frontloaded to 2013. These mainly consist in a further reduction in public employment through the transformation of the special mobility scheme into a requalification programme, the convergence of public and private sector working rules, especially by increasing the public-sector working week from 35 to 40 hours; the increase of public employees' contributions to the special health insurance schemes and the reduction of fringe benefits. Rationalisation efforts across line ministries shall be deepened beyond the original budget plans and social spending shall be further streamlined. In addition, the above-mentioned permanent measures shall be complemented by temporary measures, to be replaced by permanent ones in 2014, consisting in the transfer of Cohesion Fund resources from less-mature projects to more advanced ones and a further reduction in capital expenditure (Polis programme);

(c) On top of the consolidation measures included in the supplementary budget, all other legislative changes and legislative proposals required to implement the reforms linked to the public expenditure review shall be adopted by the Government or submitted to the Parliament, as the case may be, by the end of the legislative session in mid-July 2013;

(d) Portugal shall continue implementing its privatisation programme;

(e) Portugal shall coordinate the exchange of information across levels of government to facilitate revenue forecasting for the 2014 budgets of the Autonomous Regions and the local authorities;

(f) Portugal shall deepen the use of shared services in public administration;

(g) Portugal shall reduce the number of local branches of line ministries (e.g. tax, social security, justice) by merging them into the 'Lojas do Cidadão' (administration and utilities single points of contact) and developing further the e-administration over the duration of the Programme;

(h) Portugal shall continue the reorganisation and rationalisation of the hospital network through specialisation, concentration and downsizing of hospital services, joint management and joint operation of hospitals and shall finalise the implementation of the action plan by the end of 2013;

(i) With the support of internationally-renowned experts and following the adoption of the amendments to Law 6/2006 on New Urban Lease and the decree law which simplifies the administrative procedure for renovation, Portugal shall undertake a comprehensive review of the functioning of the housing market;

(j) Portugal shall develop a nationwide land registration system to allow a more equal distribution of benefits and costs in the execution of urban planning;

(k) Portugal shall implement the measures set out in its action plans to improve the quality of secondary and vocational education and training, in particular the management tool to analyse, monitor and assess the results and impacts of education and training policies shall be made fully operational and the professional schools of reference shall be established;

(l) Portugal shall complete the adoption of the outstanding sectorial amendments necessary to fully implement Directive 2006/123/EC of the European Parliament and the Council of 12 December 2006 on services in the internal market(1);

(m) Portugal shall implement targeted measures to achieve a steady reduction of the backlogged enforcement cases with a view to resolving the backlog of court cases;

(n) the Government shall submit to the Parliament a framework law on the main national regulatory authorities in order to guarantee their full independence and financial, administrative and management autonomy;

(o) Portugal shall improve the business environment by completing pending reforms on the reduction of administrative burden (fully operational Point of Single Contact provided for by Directive 2006/123/EC and 'Zero Authorisation' projects) and by carrying out further simplification of existing licensing procedures, regulations and other administrative burdens in the economy which are a major obstacle for the development of economic activities;

(p) Portugal shall complete the reform of the ports' governance system, including the overhaul of port operation concessions;

(q) Portugal shall implement the measures enhancing the functioning of the transport system;

(r) Portugal shall implement the measures eliminating the energy tariff debt and fully transpose the Third EU Energy Package;

(s) Portugal shall ensure that the new legal and institutional PPP framework is applied and the PPP road contracts continue to be renegotiated in line with the strategic plan presented by the Government and with the regulatory framework revision, in order to obtain substantial fiscal gains, particularly in 2013;

(t) Portugal shall continue to focus on measures to combat tax fraud and evasion and strengthen taxpayers' compliance;

(u) Portugal shall introduce adjustments to the severance payments regime in accordance with the provisions of the Memorandum of Understanding;

(v) Portugal shall promote wage developments consistent with the objectives of fostering job creation and improving firms' competitiveness with a view to correcting macroeconomic imbalances. Over the Programme period, any increase in minimum wages shall take place only if justified by economic and labour market developments;

(w) Portugal shall continue to improve the effectiveness of its active labour market policies in line with the results of the assessment report and the action plan to improve the functioning of the public employment services.

8. The general government deficit shall not exceed 4,0 % of GDP in 2014. To achieve this objective Portugal shall implement the expenditure-reducing measures that were prepared in the framework of the public expenditure review. Overall, the amount of these measures shall add up to 2 % of GDP in 2014 and shall include the reduction in the wage bill aimed at reducing the size of the public-sector work force while changing its composition towards higher-skilled employees; further convergence of public and private sector work rules, i.e. increase in working hours, introduction of a bank of hours, reduction in holiday entitlements; the implementation of a voluntary redundancy scheme and the introduction of a single wage and supplement scale; a reduction of the current differences between the civil servants' pension regime (CGA) and the general pension system; an increase in the statutory retirement age; and, if strictly needed, a progressive sustainability contribution on pensions. Furthermore, savings in intermediate consumption and expenditure programmes across line ministries shall be stepped up. Some of the measures may be partly or fully replaced by others of equivalent size and quality.

9. With a view to restoring confidence in the financial sector, Portugal shall aim to maintain an adequate level of capital in its banking sector and ensure an orderly deleveraging process in compliance with the deadlines set in the Memorandum of Understanding. In that regard, Portugal shall implement the strategy for the Portuguese banking sector agreed with the Commission, the ECB and the IMF so that financial stability is preserved. In particular, Portugal shall:

(a) advise banks to strengthen their collateral buffers on a sustainable basis;

(b) ensure a balanced and orderly deleveraging of the banking sector, which remains critical in permanently eliminating funding imbalances and reducing the reliance on Eurosystem funding in the medium-term. Banks funding and capital plans shall be reviewed quarterly;

(c) encourage the diversification of financing alternatives 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 insurance;

(d) continue to streamline the state-owned CGD group;

(e) optimise the process for recovering the assets transferred from BPN to the three state-owned special purpose vehicles through the outsourcing to a professional third party of the management of the assets, with a mandate to gradually recover the assets over time; select the party managing the credits through the ongoing competitive bidding process and include adequate incentives to maximise the recoveries and minimise operational costs into the mandate; and ensure timely disposal of the subsidiaries and the assets in the other two state-owned special purpose vehicles;

(f) on the basis of the set of preliminary proposals to encourage the diversification of financing alternatives to the corporate sector presented, develop and implement solutions that provide financing alternatives to traditional bank credit for the corporate sector; assess the effectiveness of government-sponsored export credit insurance schemes with a view to taking appropriate measures compatible with Union law to promote exports;

(g) analyse banks' recovery plans and issue guidelines to the system on recovery plans and prepare resolution plans on the basis of the reports submitted by the banks; ensure that the initial and annual funding arrangements for the Resolution Fund are settled; and prioritise, in the implementation of the recovery and resolution plans of banks, those banks that are of systemic importance;

(h) implement the framework for financial institutions to engage in out-of-court debt restructuring for households, smooth the application for restructuring of corporate debt, and implement an action plan to raise public awareness of the restructuring tools;

(i) prepare quarterly reports on the implementation of the new restructuring tools and conduct a survey of insolvency stakeholders to inquire about the appropriateness of the existing debt restructuring tools and possible gaps or bottlenecks, explore alternatives to increase the successful recovery of companies adhering to the PER (the Special Revitalisation Procedure, for companies in serious financial distress) and the SIREVE (the Companies' Recovery System through Extrajudicial Agreements, for companies in difficult economic situation or imminent or actual insolvency);

(j) assess the scope for improving the performance and governance of existing government-sponsored credit lines, establish a quarterly monitoring and reporting mechanism on the allocation of the government sponsored credit lines aimed at facilitating access to finance to SMEs; conduct an external audit of the National Guarantee System.

(1)

OJ L 376, 27.12.2006, p. 36.'