Brussels, 30/04/2009 (Agence Europe) - Improving the viability and quality of public finances is a major challenge even in a period of crisis. This is the line being prepared by the Ecofin Council for its conclusions to be adopted on Tuesday 5 May. In the current context, it is crucial that budgetary measures for relaunching the economy are reconciled with the definition of a solution for getting out of the crisis. This need is all the more urgent given the challenges created by the ageing population and the concurrent risks to long-term public financing. The task is a delicate one and the message highly-nuanced. Although the demand for consolidation should not be left out, the draft conclusions do not particularly emphasise, at this stage, what efforts are needed to achieve this goal. The Council appears to be saying that there is, for the time being, no point in developing any explicit medium-term objectives (MTO), namely, a deadline on a return to balancing the books. The Council reaffirms the principle of budgetary consolidation in a longer-term and rather vaguer perspective.
Long-term viability of public finances. In its examination of the main conclusions in the Commission's communication on demographic challenges in a period of crisis (EUROPE 9891), the Council seeks to outline the initial effects of an ageing population on the public coffers during the next decade. The repercussions of demographic evolution on the EU's potential growth could be more than one percentage point of GDP and public spending linked to ageing is expected to increase by 4.7 percentage points of GDP by 2060. The Council stresses that continuation of structural reforms for rapidly reducing public debt, creating jobs and productivity and reforming the pensions, health care and long-term care systems, are still questions that need tackling. The conclusions state that these long-term forecasts “should be taken into account in the definition of MTOs incorporating implicit government liabilities”.
Quality of public finances. Measuring the effectiveness of public spending and the architecture for budgetary governance revenue systems plays a key role, given the currently limited room for budgetary manoeuvre. The Council is calling on the Commission and the Economic Policy Committee to continue their work to improve the quality of public finances as part of the post-2010 Lisbon strategy. (A.B./trans/rh)