Eurostat may remove BPF independence

Eurostat, the statistical office of the European Union (EU), may try and remove the independence from Portugal’s development bank Banco de Fomento (BPF).

The bank, which has had a leading role in disbursing funds to projects from Portugal’s Recovery
And Resilience Fund, has been classified in the financial companies institutional sector since its creation.
But Eurostat wants to strip the bank of its independence and has requested from the Portuguese authorities that it should be integrated within the EU’s budgetary framework, however the government has managed to postpone the decision for now.
For the time being, the institution led by Celeste Hagatong and Ana Carvalho, continues to be independent.
On September 15 a meeting was held at Portugal’s National Statistics Institute (INE) to discuss how the Banco de Fomento should be classified.
If the bank is integrated under EU aegis, its revenues and expenses would have to be included in Portugal’s budget balance, as well as its cashflow needs, accounted for as part of Portugal’s public debt under the terms of Maastricht, and as such would be subject to budgetary rules.
The bank would lose its financial independence and fall under greater control of the General Directorate of the Budget to avoid future surprises in terms of the financial commitments taken on and if the bank suffered negative results these would be included in the State Budget.
Portugal’s development bank carries out State policy under considerable financial and administrative independence and its business model enables it to generate more than half of its revenues.
Some €250 million from the RRP was used to beef up the banks capital enabling it now to offer products like Strategic Recapitalisation or credits from the Consolidar programme. The programme channels venture capital funding (from the RRP) to economically viable SMEs and MidCaps affected by the Covid-19 pandemic.
However, since the BPF is a State body that executes public policy and is not a commercial bank like State-owned bank Caixa Geral de Depósitos (CGD), the argument in favour of its integration is a strong one.

Photo: Lusa: Estela Silva