Brussels, 11/01/2005 (Agence Europe) - On Tuesday the Commission examined the stability and convergence programmes for the five Member States currently implementing them. It highlighted certain risks involved in medium term objectives to achieve balance, particularly in Austria and considered that the updated programmes for the Czech Republic ad Netherlands would be too ambitious. Luxembourg is presenting fundamentally sound public finance, as is Sweden in compliance with the demands of the Stability and Growth Pact. The Ecofin Council will be deciding on these programmes on 18 January.
Austria is in a good position for not going above the 3% of GDP benchmark, revealed Commissioner Almunia, who noted, however, "a certain easing off from budget objectives". Despite supplementary income from future privatisation, the Commission is concerned at forecasts for 2007-08. It believes that in this period the risks are underestimated due to the fact that growth potential is below par and there appears to be a reduction in spending which appears too vague. This puts the objective of balancing the public accounts in 2008 in danger, a year when debt has to fall below 60%.
The Commission believes that the Netherlands are on track to keep their budget deficit below 3% in 2005 but regrets that the budgetary efforts in following years is less ambitious. The stability programme for 2004-07 intends to reduce the deficit by up to 1.9% in 2007 but the absence of additional measures will weigh this objective down when it comes to achieving balance in the medium term.
With a "not very ambitious" update of its convergence plan for 2004-07 Almunia says that the Czech Republic is expected to reduce its budget deficit in the medium term. Objectives remain the same in relation to its programme submitted in 2003, although growth in GDP was rising on the whole. The Commission is concerned about more longer term viability and recommends that the country speeds up reforms of pensions and health. The fall in the spending ratio, bigger than the forecast reduction in income, is expected to allow for a reduction of the deficit by 5.2% in 2004 to 3.3% in 2007 and a return to under 3% by 2008.
Luxembourg: finances are sound even if "certain moderation of public spending is welcome", claimed Almunia. The deficit in 2004: 1.4% of GDP will be 1% in 2005 where it will stay during 2006-07. Taking into account the realistic growth scenario of between 3 and 4%, these objectives are plausible in the eyes of the Commission if spending is mastered.
Swede: not problem for public finance and which Almunia believes could help to tackle the budgetary costs of an ageing population. The updated programme expects a surplus of 2% of GDP on average between 2004-07 and the risks appear balanced, according to the Commission, which considers that the country would gain more if it continued reform on health spending and the rate for business and employment.