Brussels, 24/03/2005 (Agence Europe) - Criticising the “sometimes excessive” interpretations of reform of the Stability and Growth Pact, Jean-Claude Juncker confirmed on Tuesday the remarks by Gerrit Zalm, Dutch Finance Minister, who announced that a declaration from the Benelux governments had been adopted specifying the meaning that should be given to recent adjustments (EUROPE No 8914). The text adopted on the fringe of the Spring European Summit stresses that the Pact maintains all its strength and scope but has gained new vigour and a more favourable framework for rational implementation at economic level. Belgium, the Netherlands and Luxembourg note that the renewed Pact strikes a good balance between the requirements of stability and growth and that implementation of the new rules is the key to the Pact's success. The spirit of the Pact remains that of reaching sustainability in public finance, which, according to the Benelux countries, requires strict application of the agreement.
The Belgian, Dutch and Luxembourg governments wish to stress that the 3% deficit and 60% debt thresholds are maintained and that multilateral budgetary surveillance will be triggered as soon as these thresholds are crossed, as no spending will be excluded from the 3% limit. The Commission's report and the Council's evaluation will identify “policy errors rather than economic misfortunes”. The taking into account of “determining factors” (Article 104§2 and §3) allow for greater flexibility only if the excess compared to the reference value is “temporary” and remains “close to the reference value”, they stress. Jean-Claude Juncker said on Wednesday that a 4% deficit would not be considered as close to the 3% threshold. Furthermore, “these determining factors cannot be involved to put an end to a procedure relating to excessive deficit” (Article 104§12), the Benelux declaration says.
The preventive section of the Pact takes on real substance for the first time, the three countries are pleased to note, stressing that the Pact states it is imperative to use to advantage the economic growth periods for consolidating public finance. The report from the finance ministers endorsed by the European Council (EUROPE No 8915) states that, by good growth periods, one should understand periods when production exceeds its potential level, given the elasticity of tax revenue. The differentiation of medium-term objectives according to the specific situation of each Member State and the taking into account of structural reforms for adapting the adjustment trajectory are also elements of satisfaction for these three governments.
Finally, improved governance rules strengthen the Pact's legitimacy and the responsibility of Member States, say the Benelux countries, which also note that the Commission's responsibility is confirmed and strengthened, mainly by the fact that it is able to give preventive advice in political matters and assess the budgetary policy of Member States.