Illustration photo – Czech Finance Minister Zbyněk Stanjura arrives at the meeting of EU finance ministers in Brussels on July 12, 2022.
Brussels – The countries of the European Union want to return to compliance with common fiscal rules, which, however, should better reflect the economic reality of the time affected by the covid-19 pandemic and the war in Ukraine. Today, the finance ministers of the EU countries supported the general principles of the reform of budget and debt rules proposed by the European Commission (EC) last year, but they do not yet agree on all the details. According to Czech Finance Minister Zbyňek Stanjury, a debate is expected, for example, on the acceptability of exceptions for individual states.
The EU's fiscal rules, known as the Stability and Growth Pact, require public debt not to exceed 60 percent of gross domestic product (GDP). At the same time, budget deficits may not exceed three percent of GDP. However, Brussels suspended the validity of the pact in 2020 due to the economic effects of the covid pandemic and extended the extraordinary relaxation until the end of this year, mainly due to the energy crisis partly caused by the war in Ukraine.
The ministers agreed today that in the future the states should once again start respecting both of the mentioned ceilings in relation to GDP, but the commission should place more emphasis on the individual situation of the individual states. “The new rules should be more realistic in order to be enforceable,” Stanjura told reporters after the meeting.
Greece, Italy, Spain and Portugal have debts exceeding twice the mentioned sixty percent ceiling and are unable to meet it in the coming years approach, while more than a dozen countries, including the Czech Republic, fit within the permitted level. The Commission is therefore counting on the introduction of multi-year national debt sustainability plans, on the basis of which each country would determine an individual path towards meeting the mentioned limits. country or just a single state, as is currently the case for the entire bloc. According to Stanjura, this escape clause will probably cause great debates.
Union officials are talking about the fact that the twenty-seven countries could agree with the European Parliament on the reform of the pact by the spring of next year. Otherwise, there is a risk of a significant delay due to the elections to the European Parliament.