Portuguese Prime Minister Antonio Costa

Lisbon, (IANS) : Portugal achieved financial stability in 2016 and the conditions of the banking sector have improved significantly, Portuguese Prime Minister Antonio Costa said in a statement on Monday.

“In 2016, Finance Minister Mario Centeno achieved the best budgetary performance which enabled income return and created conditions for investment that resulted in acceleration of growth and significant improvements in creating jobs,” Xinhua news agency quoted Costa as saying.

His statement came after Portugal’s Ministry of Finance on Monday confirmed the European Commission’s optimistic stance on Portugal’s progress.

“Throughout the horizon of projection, the deficit will be clearly below 3 per cent, and the ration of public debt will see a downward turn,” Ceteno said in a statement, “The durable and sustainable correction of the deficit guarantees conditions for Portugal to exit the excessive deficit procedure.”

The European Commission said in its Winter 2017 Forecast released on Monday that the Portuguese economy had grown 1.3 per cent in 2016 and would progress to 1.6 per cent this year, slightly above the Portuguese government’s estimates.

According to the Commission, Portugal’s deficit hit 2.3 per cent of GDP in 2016 and would drop to 2 per cent in 2017.

Brussels said the improvement in economic forecasts was due to a “strong performance in the second half of the year, particularly in tourism”, and also in private consumption.

However, the Commission pointed to negative risks for the country’s economy, involving problems in the banking sector, pointing out that it could affect investment.

Last year, Brussels fined Portugal as well as Spain for not taking sufficient action to correct its budget deficit. However, the Commission later recommended cancelling the fine.

Portugal’s budget deficit hit 4.4 per cent last year, above the 3 per cent EU benchmark set by Brussels.