Slovenia’s BRDO — European Union Finance Minister said on Friday that changes to the EU budget rules currently under consideration are a more realistic way to help invest in the post-pandemic economy and reduce huge public debt. Said it should be possible.
At a two-day meeting in the town of Burd, Slovenia, the finance ministers of 27 countries will begin discussions on how to modify the rules to better fit the changing economic reality after the resurrection from 2023.
“We need a viable debt reduction path for all Member States. Vice-President of the European Commission Valdis Dombrovskis needs to support fiscal sustainability and economic recovery when attending the talks. We need to balance with. “
Regulations that limit borrowing by the European government to protect the value of the euro are currently suspended until the end of 2022 to give member states more room to combat the economic downturn caused by the coronavirus pandemic. It has been.
The debate about changing them is likely to continue until 2022, but some common themes have already emerged, such as the need to protect government investment.
“We need to avoid what happened in the crisis before public investment reached level zero year after year,” EU Economic Commissioner Paolo Gentiloni said when he arrived at the summit.
“This is unlikely to happen in the next few years, and that’s why we’re discussing financial rules related to investment tomorrow,” he said, adding that building consensus on change would be a “big effort.” rice field.
“Green” investments aimed at reducing Europe’s net CO2 emissions to a zero target by 2050 should be treated specially and some claims are exempt from EU deficit calculations. It can even happen. France’s Treasury Minister Bruno Le Maire said at the meeting that it was a worthwhile idea to discuss.
Discussions on EU fiscal rules were exacerbated by the lack of confidence between the traditionally more financially modest northern EU countries and what is considered the wealthier southern countries, and the 2010-2015 sovereign debt crisis. Political sensitive due to cracks.
The more financially modest fear that others will take advantage of the deficit calculation exemption and piggyback on the more demanding ones, especially as it may be difficult to define the criteria for what constitutes “green” spending. ..
Currently, the rules stipulate that the government must not run a budget deficit of more than 3% of GDP and must keep debt below 60% of GDP. If you have a lot of debt, you need to reduce the excess by 1/20 each year, which exceeds the 60% limit.
However, in some countries like Italy, there is a debt of 160% of the country’s production, especially if the country makes a large investment in making the economy “green” and more digital, 5% per year. Point reduction is impractical.
EU finance ministers from the Netherlands, Finland, Sweden, Slovakia, the Czech Republic, Austria, Denmark and Latvia have traditionally represented a modest approach to public spending and have expressed their cautious support for changes in the rules.
“We are accepting discussions on improving economic and fiscal governance, including the Stability and Growth Pact. Improvements should be made while sticking to the rules-based fiscal framework,” they said in a joint letter. I wrote in.
By Jan Strupczewski and Michael Nienaber