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BRUSSELS, July 27 (Xinhua) -- The EU will not impose financial sanctions on Spain and Portugal over their excessive deficits but will set out a new fiscal
adjustment path for both countries, said Valdis Dombrovskis, vice president of
the European Commission, on Wednesday.

Taking into account the efforts from Spain and Portugal and the current challenging economic environment, the college of EU commissioners cancelled the
fine for both countries, Dombrovskis told a press briefing.

The Commission, the bloc's executive arm, is set to discuss with the European Parliament after the summer break on whether to suspend the structural funds
supporting infrastructure construction in both nations.

Portugal was expected to cut its deficit below 3 percent of gross domestic product (GDP) last year, but the gap turned out to be 4.4 percent in 2015. Spain
was to cut the deficit below 3 percent this year, but is predicted to remain
above 3 percent also in 2017.

The Commission said Portugal could gain one extra year to fulfill its deficit goal, meaning Lisbon has to cut its deficit below 3 percent by the end of this
year. Madrid was granted another two years to address its excessive deficit by
the end of 2018.

Meanwhile, both countries have to take effective action and report on it by Oct. 15.

The Commission said it would present its proposal to the European Council for a final decision.

The Commission's decision came as Europe faces multiple crises and anti-EU sentiment following the British vote to leave the bloc in a referendum.

Experts cautioned that possible financial sanctions would fuel eurosceptic leanings, particularly in Madrid and Lisbon. Besides, the EU ruling would seem
"unfair" to both countries as France, which has repeatedly broken EU budgetary
rules, was not faced with fines.

On July 12, the EU announced that Spain and Portugal had not taken effective action to correct their excessive deficits. According to EU rules, the two
countries could have faced fines of up to 0.2 percent of GDP.

Both countries later submitted requests asking for the fine to be cancelled, while reaffirming their commitment to complying with the rules.

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