Tighter rules on government deficits

Published: 30 September 2010 y., Thursday

In response to the financial crisis, the Commission has put forward legislative proposals to strengthen and expand existing tools for coordinating economic and fiscal policy in the EU.

The proposals aim to strengthen the Stability and Growth Pact (SGP) – particularly through an increased focus on public debt and fiscal sustainability – extend surveillance to macroeconomic imbalances and make enforcement more effective through the use of sanctions and incentives.

The proposals would not require changes to the EU Treaty, but must still be approved by the Council and the European Parliament.

Monitoring public debt levels

To better make sure that countries respect the SGP rule of not having debt of more than 60% of their GDP, a benchmark for debt reduction would be made operational. EU members with debt ratios above 60% of GDP could become subject to an “excessive deficit procedure” after an analysis of different factors which affect the quality of the debt and the country’s future prospects.

Strengthening national fiscal frameworks

The Commission also proposes to strengthen national fiscal frameworks and align them better with the new governance rules. Reforms could include ensuring consistent accounting, aligning national fiscal rules with EU Treaty obligations, switching to multi-annual budgetary planning and ensuring that the whole system of government finances is covered by the fiscal framework.

Preventing and correcting macroeconomic imbalances

Another lesson learned from the crisis is that fiscal policy should not be looked at in isolation. An improved broader macroeconomic surveillance to avoid large imbalances and big and persistent divergences in competitiveness would therefore include regular assessments and an alert mechanism. Once an alert is triggered, the Commission would make a country-specific analysis and recommendations to the Council on how to tackle the imbalances. It could also issue an early warning directly to the country itself. In particularly serious cases, the Commission could recommend placing a member country in an “excessive imbalances position”, triggering stricter surveillance of corrective action.

Enforcement gets teeth

Stronger enforcement is a major part of the proposals which also foresee a set of gradual sanctions for non-compliant countries. Non-interest bearing deposits would be converted to fines in case of repeated non-compliance.


Šaltinis: ec.europa.eu
Copying, publishing, announcing any information from the News.lt portal without written permission of News.lt editorial office is prohibited.

Facebook Comments

New comment




Associated articles

The most popular articles

Taking stock of the single market

Most EU countries continue to meet deadlines for incorporating single market rules into national law, contributing to economic growth and job creation. more »

Japan debuts new bullet train

Japanese officials unveil their new bullet train, capable of travelling at speeds of 320 km per hour (198 miles per hour). more »

The Security Technology Exhibition KIPS 2011 to be Held in Kiev

The first International Security Technology Exhibition, KIPS 2011, will be held on 23-26 February 2011 in Kiev (Ukraine). The motto of the exhibition is ‘There can never be too much security!’ more »

Dubai dining reaches new heights

The world's highest restaurant opens in Dubai, United Arab Emirates, located 400 metres above ground in Burj Khalifa, the world's tallest tower. more »

Clarifying rules to strengthen consumer rights

The rights of consumers will be clarified and updated, whether they shop at a local store or buy goods on line, under new EU rules as amended by the Internal Market Committee on Tuesday. more »

Fiji and Papua New Guinea: green light for economic agreement

MEPs on Wednesday gave their green light for the Council to conclude an Interim Economic Partnership Agreement with Papua New Guinea and Fiji, two countries of the Pacific Region with significant exports to the EU. more »

Setting the stage for economic recovery

Report sets 10 priorities for tackling the bloc's main economic challenges, launching the first ever ‘European semester'. more »

Capsule rooms appear in Shanghai

China's first capsule hotel ready to open its doors in Shanghai, aims to capture slice of booming leisure budget travel market. more »

A turning point for the European financial sector

Declaration by Michel Barnier on the start of three new authorities for supervision. more »

A successful start for the euro changeover in Estonia

On 1 January, Estonia adopted the euro as its official currency and the changeover is running smoothly and according to plan. more »