Brussels, 07/07/2014 (Agence Europe) - The head of the Eurogroup, Jeroen Dijsselbloem, made a move in Italy's direction on Monday 7 July in terms of flexibility under the stability and growth pact rules.
“On the preventive arm of the Pact, and many countries are there, there is room for flexibility only on the basis of real economic reforms, that are not just promised but delivered, with real positive impact on the budget. So it is not just talking but getting things done that could actually buy countries more time. It is up to European Commission to assess whether reforms are delivered if they could allow any country more time. Assessment depends on the country specificities and on the deviation from objectives”, said Dijsselbloem on his arrival for the Eurogroup meeting.
Italy currently comes under the SGP's preventative arm because it is no longer subject to proceedings for excess deficit because its deficit stood at 2.6% of GDP in 2013. Italy's main problem is meeting the public debt reduction target, with its public debt expected to reach 135.2% of GDP in 2014. The Italian government is introducing a one thousand day period of economic reforms in September.
Dijsselbloem says that the EU rules do not need to be changed and it is for the Commission to examine progress and whether a country is on track to meet its medium-term objectives.
Wanting greater clarity about how the SGP flexibility is to be construed, Irish Finance Minister Michael Noonan said it was good to have a more flexible interpretation of the existing rules because the SGP was strengthened during the years of financial crisis. Spanish Finance Minister Luis de Guindos called for “balance” between stability in the rules and a flexible interpretation of the rules.
On the defensive, German Finance Minister Wolfgang Schäuble said that no member state was calling for a change in the SGP legislation. He said economic growth came from introducing structural reforms and pursuing budget consolidation and everyone wanted to do more to invest more and stimulate growth, but it must not be an excuse or a shortcut for getting out of what has to be done. (MB)