Brussels, 07/12/2010 (Agence Europe) - The EU27 economy and finance ministers did not manage to reach agreement on Tuesday 7 December on how the cost of reforming the pension system should be catered for under the Stability and Growth Pact rules for excess deficit. Poland and other countries want more details and it will therefore be a report by the Belgian Presidency rather than the ECOFIN Council that will be sent to the 16-17 December European Council.
Excess deficit procedures are launched if a country's public deficit exceeds the cut-off point of 3% of GDP. The Commission's idea, backed by most member states, is that excess deficit proceedings would not be issued against a country that has overhauled its pension system if its public deficit is around 3% of GDP and more importantly, if its public debt is below 60% of GDP. Each country would be considered on a case-by-case basis.
Nine member states, headed by Poland and Hungary, which have undertaken or are planning to undertake reforms to introduce a multi-pronged public-private pensions system, have asked for changes to the way the costs of such reforms are taken into account.
Belgian Finance Minister Didier Reynders, the acting chair of the ECOFIN Council, explained that the Belgian Presidency report has the backing of the vast majority on the Council. He said that they were trying to reach consensus on the issue but would not be adjusting the definitions set out in the Maastricht Treaty of the debt and deficit. Instead, it would be a matter of examining each member state's situation on a case-by-case basis to see how to take account of pension system elements that have been introduced in a number of member states, he added. If a member state's debt is less than 60% of its GDP and its public deficit is around 3% of GDP, then he said that one would examine the impact of the structural reforms to see if it would affect the analysis of the need for an excess deficit procedure. This would be a temporary set-up, rather than a permanent system.
EU Economic and Monetary Affairs Commissioner Olli Rehn said that the right balance had to be struck. He said there were simple yet strict Stability and Growth Pact rules to be respected and incentives were needed to implement reforms of the pension system. He said they were close to reaching a reasonable and balanced compromise.
The ECOFIN Council reached agreement on a report for the European Council on bank taxes. Reynders said that the aim of the debate was to avoid double taxation among the different bank taxes that already exist in the member states. (L.C./transl.fl)