Brussels, 03/06/2016 (Agence Europe) - Giving Spain and Portugal extra time to bring the public deficit below the 3% of GDP mark is based solely on the excessive procedure of the Stability and Growth Pact, according to legal services of the Council of the EU.
Although the country-by-country recommendations may provide plausible scenarios to reduce government deficit, they are no substitute for acts adopted under the excessive deficit procedure, the legal experts of the Council said in an opinion dated Tuesday 31 March to the Ecofin Council, according to European source.
In mid-May, the European Commission suggested Portugal and Spain be given an extra year to reduce their excessive deficits, making it 2016 for Lisbon in 2017 from Madrid (see EUROPE 11553). It made this recommendation in the framework of the country-by-country socio-economic policy recommendations, a procedure which is based on Article 121 of the Treaty. Since then, the Ecofin Council has called for its legal services to provide clarifications on the relationship between the country-by-country recommendations and the excessive deficit procedure of the Pact, which is based on Article 126 of the Treaty.
According to legal experts of the Council, adopting country-by-country recommendations presupposes the adoption, previously or in parallel, of an act under the excessive deficit procedure. Basically: until the Commission has recommended extra time for Spain and Portugal on the basis of Article 126, the Council may not formally grant this extra time. The European finance ministers are therefore unable to make any decisions regarding the budgetary trajectories of the two countries on Friday 17 June.
We have always said that we would return to these issues in “early July”, a European Commission spokesperson said on Friday 3 June, adding: “as far as we are concerned, the application of the Pact is based on rules. There is a discretionary aspect which allows us to take account of the specific situations of the member states, in full respect of the principle of equality of treatment”.
The Commission has come in for some harsh criticism over its lack of resolve in the application of the rules of the Stability Pact, with new general elections to be held in Spain on Sunday 26 June. In an interview with several European newspapers, the president of the Eurogroup, Jeroen Dijsselbloem, said that the European institution would be “well advised (…) to pay more attention to its credibility”, as the member states need an “objective arbitrator” in the application of the European budgetary rules. This was a reference to the admission of the Commission president, Jean-Claude Juncker, that the European institution had given Paris extra time “because it's France”. As regards the cases of Spain and Portugal, the Juncker is reported to have done all in his power to get the Commission to hang fire, or even to take the opposite position to that defended by the competent commissioners for economic and financial matters. (Original version in French by Mathieu Bion)