The Council of Ministers approved in mid-July a proposal to revise the Budget Framework Law (LEO), which was delivered this Wednesday to Parliament for debate and voting. The proposal aims to adapt Portuguese law to the new European Union economic governance framework, after having exceeded the initial deadline to do so.
The bill proposes that the expenditure limits set out in the new medium-term frameworks constitute the basis for the following year's Budget, providing greater stability and predictability in the design of State budgets. The Medium-Term National Structural Budgetary Plan (POENMP) becomes the structure for the State's budgetary policy, moving away from its focus on the Stability Programme.
The revision provides that the medium-term budgetary planning framework becomes binding in the following year with regard to the limit for Public Administrations expenditure, compatible with the net expenditure reference trajectory agreed with the European Commission. The Medium-Term Budgetary Plans must be submitted by governments that take office by April 15, with the State Accounting Entity being created in phases, with completion expected by the 2029 State Budget.
The proposal also includes a strengthening of the powers of the Public Finance Council (CFP), establishing that the Government must comply with the assessments of that institution or publicly explain its position within two months. The 129-page document was prepared after receiving contributions from the CFP, the Court of Accounts, and the Technical Budget Support Unit (UTAO).
