Brussels, 07/05/2012 (Agence Europe) - Economic and Monetary Commissioner Olli Rehn has said that the revised Stability and Growth Pact, although integrating quantitative rules on budgetary deficit, allows scope for judgment depending on a country's specific economic situation. “The Stability and Growth Pact is not stupid. Yes, the EU fiscal framework is rules-based with clear reference values for public deficit and debt for triggering the excessive deficit procedure and, if needed, sanctions. But, at the same time, the Pact entails considerable scope for judgment, based on economic analysis”, said Rehn, speaking on Saturday 5 May during a conference organised by the Free University of Brussels. He spoke of “differentiation” among the member states when it comes to interpreting the rules, according to each country's fiscal space and macroeconomic conditions. Olli Rehn also called on “member states that have better fiscal space to let the automatic stabilisers function fully”. This was a reference to Germany, a country in surplus, to do more to promote domestic consumption. German Finance Minister Wolfgang Schäuble took a stance in favour of salary increases.
In addition to consolidating targeted and differentiated public finance, the commissioner identified two other building blocks of a strategy that is able to promote growth. He called for continued structural reform in order to reduce macro-economic imbalance and divergences in competitiveness in the European Union. At the end of May the Commission will make specific recommendations to the 12 countries (Belgium, Bulgaria, Cyprus, Denmark, Finland, France, Hungary, Italy, Slovenia, Spain, Sweden and the United Kingdom) that have been the subject of in-depth analysis in this field (see EUROPE 10553). The third building block covers stimulation of investment in infrastructure and completion of the internal market. Calling for innovative financial instruments such as “project bonds” to unlock private funding, Rehn states that the Commission is exploring the creation of instruments that will make it possible to share risks inherent to investment, mainly through the reprogramming of European structural funds with a view to creating guarantee funds for small and medium-sized enterprises. (MB/transl.jl)