UTAO highlights dangers of credit lines and TAP for public finances

UTAO highlights dangers of credit lines and TAP for public finances

The Technical Budget Support Unit (UTAO) warned today that the credit lines made available due to the covid-19 pandemic will constitute "contingent liabilities" by the State, as well as for the budgetary risks of an intervention in TAP.

In a report on the assessment of the Stability Program (PE), according to a report by the Lusa agency, parliamentary technicians point out that the guarantees given by the State "have a weight of 40.7% in the financial measures of fiscal policy and its most important component are the credit lines guaranteed by the State: the Economy Support line covid-19 (6.2 billion euros) and the Capitalizar 2018 line – covid-19 (400 million euros), is already exhausted) " .

"These guarantees constitute a contingent liability, that is, a State responsibility, which will materialize in expenditure and increase in the budget balance in the event of default by the debtor. There are also public guarantees in export insurance" warns the unit that supports the deputies of the Budget and Finance Commission (COF) of the parliament, according to Lusa.

However, UTAO points out that "the two main categories of financial incentives presented (deferral of taxes and granting of guarantees) have a weight of 89.2% in the total presented and have no direct impact on public finances in 2020", but "the provision of guarantees represents a downward budgetary risk for the following years".

The unit coordinated by Rui Nuno Baleiras points out the same type of risks related to the "need for Portuguese State intervention in TAP", which UTAO sees as having a "high probability of materialization", and refers to the lack of information on this matter in the Program of Stability, advances the news from Lusa.

UTAO warned today of "risks in the transparency of information on budgetary policy", in the assessment of the Government's EP, which deals with the impact of measures to combat covid-19.

In a subtitle in which UTAO warns of "risks in the transparency of information on budgetary policy", it can be read that "the competent national and community entities decided to keep confidential the Community guidelines for the preparation of the Stability Programs and the Convergence Programs" .

"It is an unexplained rupture with the openness to all citizens that had been practiced until last year. It harms the independent external evaluation and parliamentary scrutiny of those documents, which are one of the pillars of economic governance in the EU and in each Member State" , the parliamentary technicians defend in the report of appreciation to the EP of 2020.

The Government presented the Stability Program on Thursday after the usual deadline (April) and without macroeconomic forecasts (which will be presented by the end of June, according to the Government), due to the covid-19 pandemic.

The document, according to the Lusa agency, includes a quantification of the government measures adopted following the economic consequences of the pandemic.
For UTAO, "17 out of 18 Stability Programs released show macroeconomic projections for the years 2020 and 2021, extending in some cases until 2023".


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