Brussels, 21/08/2001 (Agence Europe) - In order to refute the allegations whereby France and Germany hope to relax the euro zone's budgetary stability pact, Commissioner Pedro Solbes declared that German Finance Minister Hans Eichel had "confirmed that the German authorities have no intention of relaxing or redefining the objectives or the framework of the Stability and Growth Pact". Mr Solbes recalled that this commitment was recently confirmed by the finance ministers during the Eurogroup meeting on 9 July (see EUROPE of 11 July, p.8). He added that this instrument "does provide room for manoeuvre during an economic slowdown". He said that countries with a sustainable fiscal situation are allowed to let automatic stabilisers work fully. This means allowing the deficit to slide by not offsetting falls in tax receipts by equivalent cuts in expenditure.
The Commissioner pointed out that the arguments put forward by Mr Eichel in favour of a spending objective rather than a deficit objective "do not bring the Stability and Growth Pact into question". For the Member States with a balanced and viable budget "the two objectives would be identical", he specified. A representative of the Belgian Finance Ministry confirmed on Monday, however, that the twelve members of the euro-zone have agreed to ease the vice of budgetary constraints, given the slowdown in activity: "the finance ministers wish to take greater account of the bad economic situation in their budgetary forecasts, something not sufficiently done hitherto".
The economic slowdown will have a negative impact on 2001 budgetary objectives but the spending aims will be maintained in both countries, it is said in Paris, thus confirming that there is no Franco-German agreement to modify the Stability Pact. This convergence of views will be reaffirmed on 31 August by the finance ministers of both countries who are to meet in the context of the Franco-German economic and finance council.