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PROPOSED LAW No. 8/XII/1.

Exhibition of Motives

The process of fiscal consolidation that Portugal is going to have to adopt, with the aim of

dispose of sustainable public finances, requires a suitable institutional framework,

which implies the existence of an independent body, with external credibility, that if

pronouns on the proposed targets with respect to the macroeconomic scenarios and

budget, the long-term sustainability of public finances, compliance with the

limits on the budget balance and compliance with the borrowing rules of the Regions

Autonomous and local authorities provided for in their respective funding laws.

For that purpose, it was created, by Article 12-I of the Law No. 91/2001 of August 20 (Law of

budget framework), republished by Law No 22/2011 of May 20, the Council

of Public Finance, whose Statutes are now approved by this Law.

The designation of Council of Public Finance adequately reflects the terminology

used internationally ( Fiscal Policy Council ).

This new independent entity corresponds to international best practices and search

respond to four crucial objectives: suitability of the mission with an extended set of

assignments in the field of public finance, independence, technical quality of analyses and

transparency.

The mission of the Public Finance Council consists of the evaluation of consistency and

sustainability of fiscal policy, which is operationalized in the assignments that

are committed: assessment of the macroeconomic scenarios adopted by the Government and the

consistency of the projections of revenue and expenditure on those scenarios; evaluation of the

compliance with the budgetary rules in force; analysis of the dynamics of public debt and the

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respective sustainability; analysis of the sustainability of existing commitments,

particularly with regard to pension and health systems and public partnerships-

private and concessions; evaluation of the financial situation of Autonomous Regions and the

local authorities; assessment of the economic and financial situation of the business sector of the

State and its potential impact on public finances; analysis of fiscal expenditure; and

monitoring of budget implementation.

In addition to the declaration of the principle of independence of the Council of Public Finance,

its Statutes aim to guarantee the said independence in the personal plan and in the plan

financial.

Personal independence is guaranteed through the process of appointing the members of the

maximum body of the Council of Public Finance,-the Higher Council-, which is effective

upon joint proposal by two politically independent entities, the Court of

Accounts and the Bank of Portugal; for the duration of the terms of the members of the same

Council, which have a long (seven years) duration, non-renewable and irrevocable; and by

a regime of incompatibilities with a view to safeguarding its independence.

The guarantee of independent capacity for the exercise of the skills that are

committed to the Council of Public Finance is pursued in various forms,

particularly by having a highly qualified technical office, by being guaranteed

access to the relevant sources of information, for detaining a recruitment capacity of

extended human resources and also, by the fact that two of the members of the Council are

coming from other Member States of the European Union.

With a view to the transparency of the performance, the Council will make it available to the public, on its page

electronics, the analyses and the reports that elaborates, presenting versions of them in

language Portuguese and in English language; will submit to regular parliamentary hearings and

will compulsorily carry out press conferences.

The funding is secured by the State Budget, being the budget subject to

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opinion favourable from the Court of Auditors and the Bank of Portugal, staying vetted, save in

exceptional situations duly substantiated, annual reductions to your budget of

health.

The Council of Public Finance is not a budgetary policy entity and, as such,

they are not assigned competences in the definition or conduct of that policy.

The independence to be given to the Public Finance Council has a functional nature, and aims to

give you conditions to produce analyses and technical reports that substantiate the discussion

informed policy at the sites of their own and, by that way, contribute to the quality of the

democracy and economic policy decisions and to the enhancement of financial credibility

of the State.

The Statutes were drawn up with the concern of being properly articulated with

financial and budgetary laws and, in particular, with the budget framework law.

Attentive to matter, at the headquarters of the legislative process taking place in the Assembly of the Republic,

are to be heard from the self-governing bodies of the Autonomous Regions and the Association

National of Portuguese Municipalities.

Thus:

Under the terms of the paragraph d) of Article 197 (1) of the Constitution, the Government presents to the

Assembly of the Republic the following proposal for a law:

Article 1.

Subject

This Law aims to approve the Statutes of the Public Finance Council, hereafter

designated by Council, created by Article 12-I of Law No 91/2001 of August 20,

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republished by Law No. 22/2011 of May 20, published in annex to this Diploma and

of which they are an integral part.

Article 2.

Transitional and final provisions

1-Within 10 days of the first appointment of the members of the Council will be

made available the necessary amount to ensure the start of its operation, by

dispatch from the Minister of Finance.

2-In the years subsequent to the beginning of the operation of the Council, it shall be entered in the

State budget the necessary funding to ensure its full operation, to which

can only be reduced in exceptional circumstances, duly substantiated.

3-A The first appointment of the members of the Council takes place within 60 days of the

entry into force of this diploma, initiating the effective exercise of its functions to

departure from the allocation of the appropriations necessary for the operation of the Council

4-In the first appointment after the passage of this Law, the terms of office of the members of the

Council have the following duration:

a) The term of office of the President, seven years;

b) The terms of office of the Vice-President and the Executive Vogal, five years;

c) The mandates of non-executive vowels, three years.

Article 3.

Entry into force

This Law shall come into force on the day following that of its publication.

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Seen and approved in Council of Ministers of July 14, 2011

The Prime Minister

The Deputy Minister and Parliamentary Affairs

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ANNEX

STATUTES OF THE COUNCIL OF PUBLIC FINANCE

CHAPTER I

General provisions

Article 1.

Nature

The Council of Public Finance, hereinafter referred to as the Council, is a legal person

of public law, with the nature of independent administrative entity, endowed with

administrative and financial autonomy and own heritage, being subject to the scheme of the

services and autonomous funds.

Article 2.

Legal regime

The Council shall be governed by this Statute, by the legal provisions of which it is

specifically applicable and by its internal regulation.

Article 3.

Headquarters

The Council has its registered office in Portugal.

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Article 4.

Mission

The Council has as its mission to carry out an independent assessment on consistency,

compliance and sustainability of fiscal policy, promoting at the same time its

transparency, so as to contribute to the quality of democracy and policy decisions

economic and to the enhancement of the financial credibility of the state.

Article 5.

Independence

1-The Council and the members of the respective bodies act independently in the

performance of the functions committed to them by law and by those present statutes, no

may request nor receive instructions from the Assembly of the Republic, the Government or from

any other public or private entities.

2-A financial independence of the Council, as well as its ability to comply

fully the respective mission, are secured financially by the Budget of the

State.

Article 6.

Attributions

For the performance of its mission, the following assignments are conferred to the Council:

a) Assessing the macroeconomic scenarios adopted by the Government and the consistency of the

budget projections with such scenarios;

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b) Assessing compliance with the established budgetary rules;

c) To analyze the dynamics of public debt and the evolution of its sustainability;

d) Analyze the evolving dynamics of existing commitments, with particular

incidence in pension and health systems and in public-private partnerships and

concessions, including the assessment of their implications on sustainability of the

public finances;

e) Assessing the financial situation of the Autonomous Regions and local authorities;

f) Assess the economic and financial situation of corporate public sector entities

and their potential impact on the consolidated situation of public accounts and their

sustainability;

g) Analyze the tax expense;

h) Follow up the budget implementation.

Article 7.

Presentation of reports

1-Within the scope of its tasks, the Council produces, compulsory and in advance of its

appreciation in the Assembly of the Republic, reports on:

a) The Stability and Growth Program and too much procedures in the framework

European regulatory of the Stability and Growth Pact;

b) The Multiannual Framework of Budget Programming;

c) The state budget proposal.

2-A The production of the report on the State Budget proposal and its presentation

in the Assembly of the Republic is without prejudice to the beginning of the process of its discussion, provided for

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in the budget framework law.

3-The Council shall also produce regular reports on the sustainability of the

public accounts, and others that it considers convenient.

4-All reports drawn up by the Council are sent to the President of the Republic, à

Assembly of the Republic, the Government and the Court of Auditors and made available in its

electronic page.

Article 8.

Access to information

1-The Council has access to all information of an economic and financial nature

necessary for the fulfilment of its mission, being all public entities obliged

to the timely provision of such information, and to the additional clarifications that

are requested.

2-It is up to the Council to define the set of information to which it has to access form

automatic and regular, according to a preset calendar.

3-Access to the information referred to in the preceding paragraphs shall comply with the restrictions laid down in the

law in the matter of state secrecy, secret of justice and banking secrecy.

4-For the purposes of the assessment provided for in the a) of Article 6, the Government makes available

mandatorily to the Council the macroeconomic models used, as well as the

assumptions made.

5-The non-compliance with the duty to provide timely reporting by part

of the public entities shall be the subject of disclosure on the electronic page of the Council.

6-If the non-compliance is found to be serious by the Council, it shall be communicated to the

President of the Republic, the Assembly of the Republic and the Court of Auditors.

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Article 9.

Cooperation with external entities

Council should promote cooperation with international entities that pursue

similar mission, and may participate in forums related to budgetary matters

or macro-economic.

CHAPTER II

Organic structure

SECTION I

Organs

Article 10.

Organs

They are organs of the Council the Board of Governors, the Executive Board and the single supervisor.

SECTION II

Top Council

Article 11.

Top Council

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The Board of Governors shall be the maximum body of the Council, being responsible for compliance

of your mission, for the pursuit of your assignments, by the definition of your plan of

activities and by the approval of internal regulations.

Article 12.

Composition

1-The Superior Council is a collegial body consisting of five members.

2-The members of the Board of Governors shall be personalities of recognized merit,

with experience in the economic and public finance areas and with a high degree of

independence.

3-The Superior Council can integrate up to two non-national members, preferably

of other Member States of the European Union.

4-Are members of the Superior Council, the President, the Vice-President, a Vogal

Executive and two non-executive Vogals.

5-The President and the Executive Vogal are compulsorily resident in Portugal.

6-The President will be a national citizen.

7-The Vice President should preferably be from a foreign country.

8-The members of the Superior Council cannot all be of the same gender.

Article 13.

Appointment

1-The members of the Board of Governors shall be appointed by the Council of Ministers under

joint proposal of the President of the Court of Auditors and the Governor of the Bank of

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Portugal.

2-Until sixty days before the end of the terms of office of the members of the Superior Council shall

proceed to the appointment of the new members.

3-In the thirty days after the termination of the term of office of a member of the Higher Council,

by any of the causes provided for in points b) a h) of Article 15 (1) shall proceed to the

appointment of a new member.

4-The nominations referred to in the preceding paragraphs are published in the 2 th series of the Journal of the

Republic in the cinces days later to the deliberation of the Council of Ministers.

5-The members of the Higher Council take office before the President of the Assembly of

Republic within the maximum of thirty days after the end of the term of office of its predecessors

or of the publication of the respective appointment, in the cases provided for in paragraph 3.

Article 14.

Duration and renewal of mandates

1-The term of office of the members of the Superior Council has the duration of seven years.

2-The members of the Superior Council cease functions with the taking of the new

members.

3-The term of office of members of the Higher Council shall not be renewable, with the exception of

mandate of non-executive vowels, which can be renewed once.

4-The outgoing members cannot go back to being appointed before they have decorated five years

from the end of its previous term.

Article 15.

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Cessation of the mandate

1-The term of office of the members of the Upper Council cesses:

a) On the date of the respective term;

b) By death or permanent disability;

c) By interdiction or inabilitation decreed judicially;

d) By resignation;

e) By conviction, carried forward on trial, by the practice of any crime;

f) By incompatibility;

g) For unwarranted failure to two meetings;

h) By exoneration, on the grounds of serious lack in the performance of its duties, under

joint proposal of the President of the Court of Auditors and the Governor of the Bank

from Portugal.

2-A justification of the lack provided for in the paragraph g) of the previous number is checked by the remaining

members of the Higher Council, becoming denigration of the justification subject to

unanimity.

3-The member of the Board of Governors whose justification is being the subject of deliberation, in the

terms of the previous number, is barred from participating and voting in that deliberation.

Article 16.

Guarantees of independence and incompatibilities

1-Without prejudice to the provisions of the provisions of b ), c ), and ), f ), g ) and h) of paragraph 1 of the previous article, the

members of the Board of Superior are imamovable.

2-It cannot be appointed as a member of the Board of Governors who are, or in the last two

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years has been, in Portugal, Deputy, Member of the Government, member of the Governments

Regional, of executive bodies of local authorities or of the governing bodies of a

political party.

3-During his tenure, the members of the Upper Council cannot perform

other public or private functions in Portugal, nor in any other entities

whose assignments can objectively be generating conflicts of interest with the

his duties in the Council.

Article 17.

Meetings and deliberations

1-The Superior Council meets on the initiative of the President or the solicitation of two of its

members and compulsorily:

a) To evaluate the results of the budget implementation of the previous year and the proposals

contained in the Stability and Growth Programme;

b) To appreciate the Multiannual Framework of Budget Programming and the proposal of

Budget of the State.

2-A meeting aimed at appreciating the State Budget proposal is held in time

useful and is without prejudice to the process of its discussion in the Assembly of the Republic, provided for in the

budget framework law.

3-The Superior Council can only deliberate with the presence of a minimum of four of its

members.

4-Each member of the Higher Council has one vote, the decisions being adopted by

simple majority.

5-In the event of a tie-up has a vote of quality the President and, in his absence, the Vice-

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President.

6-The Director of Technical Services prepares and secretaries the meetings of the Superior Council,

watching it at the same, without a right to vote.

7-Reports are the subject of discussion and approval by the Superior Council before

be made public.

8-Meetings held for the purposes of the provisions of paragraph 1, are followed by hearings

parliamentarians to the President and the Vice-President, as well as of the subsequent conference of

press of both.

Article 18.

Competences of the President of the Higher Council

It is incumbent upon the President of the Superior Council

a) Convene and chair the Higher Council, listening in advance to the Vice-President,

and direct your meetings;

b) Coordinating the activity of the Higher Council;

c) Chairing the Executive Board, and in that capacity, participate in the day-to-day management of the

Advice;

d) Participate in the parliamentary hearings and the press conferences;

e) Exercise any other skills that are committed to you by the Regulation

internal or delegated by the Higher Council.

Article 19.

Competencies of the Vice-President of the Higher Council

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It is incumbent upon the Vice-President of the Superior Council to:

a) Pronount beforehand on the convening of the Higher Council and on the

subjects to be treated;

b) To replace the President in his non-executive functions, in his absences or

impediments;

c) Participate in the parliamentary hearings and the press conferences;

d) Exercise any other skills assigned to it by the Regulation

internal.

Article 20.

Status of members of the Upper Council

1-The remunerative status of members of the Board of Governors shall be fixed by a

commission of maturities, consisting of three members and appointed by dispatch of the

Minister of Finance under joint proposal of the President of the Court of Auditors and of the

Governor of the Bank of Portugal.

2-In the fixation of the remunerative status of members of the Board of the Superior the commission of

maturities must, as much as it is compatible with the preservation of the respective

independence, taking into account the financial and budgetary situation of the State and the limit

arising from the Act No 102/88 of August 25.

3-The members of the Board of Governors benefit from the social security scheme of which

enjoyed the date of the respective appointment or, in the absence thereof, of the general security regime

social.

SECTION III

Executive Board

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Article 21.

Executive Board

The Executive Board shall ensure the day-to-day management of the Council.

Article 22.

Composition

1-A The Executive Board shall be composed, by inherence of the respective functions, by the President

of the Higher Council, the Executive Vogal and the Director of the technical services of the

Advice.

2-The President of the Superior Council presides over the Executive Board.

3-The Executive Vogal replaces the President of the Executive Board, in its absences or

impediments, as far as exclusively performative functions.

SECTION IV

Single fiscal

Article 23.

Single fiscal

The single tax officer is the body responsible for the control of financial and equity management of the

Advice and its legality.

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Article 24.

Designation, mandate and remuneration

1-The single tax officer is an official reviewer of accounts or a society of official reviewers of

accounts, designated by dispatching the Minister of Finance under joint proposal of the

President of the Court of Auditors and the Governor of the Bank of Portugal.

2-The single tax officer is designated for a period of five years, non-renewable, owing

ensure functions up to your replacement.

3-A remuneration for the single supervisor shall be fixed on a joint proposal of the President of the Court

of Accounts and the Governor of the Bank of Portugal.

Article 25.

Competence

It shall compete, in particular, for the single tax:

a) To monitor and monitor the financial and heritage management of the Council;

b) Periodically examine the financial and economic situation of the Council and check

compliance with the regulatory standards of its business;

c) Issue opinion within a maximum of 10 days on the acquisition, oneration,

leasing and disposal of immovable property;

d) Issue opinion on the management report and accounts of the Council;

e) Issue opinion on any matter that is submitted to it by the Council

Superior or by the Executive Board;

f) To participate to the competent entities the irregularities that it detects.

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CHAPTER III

Organization of services

Article 26.

Technical services

1-The Council has the necessary technical services for the performance of its

assignments, being the respective endowment, organisation, operation and competences

fixed in internal regulation.

2-Technical services are directed by a Director.

3-The Director is designated from among the staff of technical services, in committee

of services with the duration of three years, and may be renewed by deliberation of the

Board Superior.

4-The Director exercises the competences delegated to him by the Executive Board.

5-The staff recruitment scheme for technical services is defined by the Commission

Executive, giving priority to the tools of mobility within the Administration

Public, without prejudice to the possibility of the opening of international tenders.

6-The staff of technical services are subject to the scheme of the individual contract of

work, being covered by the general social security regime.

7-Staff who hold a public employment legal relationship shall carry out their duties

by yielding agreement of public interest, pursuant to the Law No. 12-A/2008 of 27 of

February.

8-The remunerative status of the staff of technical services is fixed by the commission of

maturities.

9-The staff of technical services have exclusivity arrangements, and may not perform

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any other public or private functions.

CHAPTER IV

Financial Regime

Article 27.

Revenue and expenses

1-Constitutions revenue of the Council from the appropriations from the State Budget.

2-The Council still has the following own revenue:

a) The grants, donations, inheritances, legacies and any clearances made in your favor

by public or private entities, accepted in the legal terms;

b) The proceeds of sale of own goods or of the constitution of rights on them;

c) Any other recipes assigned to it by law, contract or to another title.

3-The monies from the State Budget can only be reduced in

exceptional circumstances, duly substantiated.

4-Constitut expenditure of the Council as resulting from the burdens and responsibilities

arising from their functioning, as well as any others necessary to pursue

of your assignments.

5-The balances of the budgetary allocations ascertained in each year transition to the budget

of the following year in the amount and in the terms to be set out annually in the decree-law of

budget implementation.

Article 28.

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Linking of the Council

1-The Council obliges itself by the signing:

a) From two members of the Executive Board, if otherwise not deliberated

by the Higher Council;

b) From whom you are entitled to the effect, in the terms and scope of the respective

mandate.

2-Acts of mere expedient may be signed by any Member of the Commission

Executive or by personnel of the technical services to whom such power has been

expressly conferred.

Article 29.

Budget

The preparation of the budget of the Council shall be the responsibility of the Council of Higher Education,

being subject to assent issued jointly by the President of the Court of

Accounts and by the Governor of the Bank of Portugal.

CHAPTER V

Surveillance

Article 30.

Audit of the Court of Auditors

The Council shall be subject to the jurisdiction and financial control of the Court of Auditors.

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Article 31.

Responsibility

1-The holders of the Council's bodies and the personnel of the technical services respond to civil,

criminal, disciplining and financially for the acts and omissions that practice in the exercise

of his duties.

2-A The financial responsibility is carried out by the Court of Auditors, pursuant to the

respective legislation.

Article 32.

Electronic page

1-The analyses and reports prepared by the Council are made available to the public in its

electronic page, in Portuguese language and English language, which must contain:

a) The relevant data on the Council, in particular the legislative diplomas that

they concern you, the internal regulations, the composition of your organs,

including the corresponding biographical elements, and the management reports and

accounts.

b) The technical reports expressly provided for in this diploma, as well as the

analysis documents produced by the Council of Public Finance.

c) Information on non-compliance situations in respect of solicitation of

information, in accordance with Article 8 (5).