EU States Approve Budget Fine Waivers for Spain and Portugal, Reports Reuters

European Union states have reached an agreement to cancel budget fines for Spain and Portugal and establish new deadlines for these countries to reduce their excessive deficits, as announced by their representative body in Brussels.

This expected decision aligns with proposals made by the European Commission in July that recommended waiving sanctions, despite both nations having exceeded the EU deficit limit of 3 percent of gross domestic product last year.

According to a statement from the EU Council, Spain will be granted an additional two years, with a target to lower its deficit below 3 percent by 2018. Meanwhile, Portugal will receive one extra year, working towards a reduced deficit of 2.5 percent by 2016.

The waivers, which are permitted under exceptional circumstances, come amid rising anti-EU and anti-austerity sentiments throughout Europe, and follow earlier leniency granted to France for missing its deficit targets.

Both Madrid and Lisbon are required to take “effective action” by October 15 and submit a fiscal report by that date, reaffirming the recommendation made by the European Commission.

Spain may face challenges in implementing new measures by mid-October, as the country is currently struggling to form a government following two inconclusive national elections in December and June.

After the summer break, the Commission will evaluate whether to suspend certain EU funds allocated to Spain and Portugal for the upcoming year, a procedure allowed under EU fiscal regulations.