Brussels, 01/09/2004 (Agence Europe) - The European Commission's publication of its communication on economic governance has fed into the debate on economic co-ordination and reform of the Stability and Growth Pact (SGP). Before finance ministers tackle the subject during the informal Ecofin at Scheveningen, the Commission will explain in its document the ideas that it announced at the end of June (EUROPE 25 June and EUROPE yesterday p 4). In effect, the main guidelines are known and confirm the aim to improve co-ordination between the BEPG and the Stability and Growth Pact (SGP) but the mechanisms for implementation still needs to be fine-tuned. In an effort to reach consensus, targeted discussions will therefore take place between ministers and the Barroso Commission. A definitive formula is not expected to be devised before the first half of 2005.
The first aspect of the Commission's proposals involve economic co-ordination and support the improvement of the Broad Economic Policy Guidelines (BEPG). In June the Commissioner for economic and monetary affairs, Joaquin Almunia, explained the need to involve national parliaments by rethinking the calendar for discussion and adoption of the BEPG.
The second aspect of the communication involves budgetary matters and focuses on SGP reform on four levels. The Commission is proposing that debt and debt dynamics in a Member State are better taken into account during the assessment of the financial situation. In this area it is also interested in future debt, the evaluation instruments for which still need to be worked out. A second innovation will allow countries that have relatively low debt to get to surplus more easily, without going beyond the 3% of GDP. This could involve a less strict interoperation of the rule which compels all Member States to present budgets that are close to balance. Third point: when an excessive deficit is revealed, the Commission will seek to ratify the principle applied to France and Germany and adapt deadlines to below the 3% ceiling depending on the economic situation. The Commission also wants to be "harder" during periods of growth. On the other hand, it is prepared to consider that exceptional circumstances authorise an excessive deficit above 3% and that these are met in periods of sluggish growth. Currently the definition only covers recession periods.
Addressing the economic and monetary committee at the European Parliament, to which it presented its services' current cases, Klaus Regling, Director General of economic and monetary affairs at the Commission guaranteed that there was not let up in the SGP and that it was a matter of making it more flexible and adapted to the situation. He affirmed that it was necessary to be "harder" on debt and added that in a Europe of diverse economic situations a country by country approach was necessary in order to target long and medium term objectives. Regling also confirmed that they should not make any legislative or regulatory changes to a political process except for instances that are unavoidable and require technical modifications. Addressing the same parliamentary committee, the Dutch ministers of finance confirmed that there was not intention to revise the Treaty of the EU or the Protocol on the SGP. Gerrit Zalm also considered that there would b e no let up in the pact and that whatever happened, it would be necessary to work for consensus between the Commission and the Council. u