The German Finance Minister, Christian Lindner, said on Saturday that the European Union (EU) still has “work ahead” to achieve a consensus on the next reform of debt standards.
“Ideas on concrete reforms remain divergent. We still have work ahead of us,” he said on the sidelines of an informal meeting with his EU colleagues in the Czech capital Prague.
Lindner explained that Germany is willing to make it easier for the directives to allow a return to sound public finances in the short term, in exchange for a long-term reliable path to debt reduction.
Germany has outlined its position in a document and is in favor of keeping the central borrowing limit but allowing a little more flexibility, especially as regards how quickly the debt must be repaid. .
Instead, he proposes that the rules be applied more consistently in the medium term, while countries like Italy and France want even more flexibility, for example to exempt investments aimed at fighting climate change from debt rules.
The EU Commissioner for Economic Affairs, Valdis Dombrovskis, has reported that he will present a specific reform proposal in October.
The Stability and Growth Pact imposes maximum debt limits on EU states. The indebtedness of the community countries must not exceed 60 percent of their GDP. In addition, budget deficits must be limited to three percent of GDP.
Some of the rules were not applied consistently in the past and need to be reformed. They were also suspended as many European countries had to take on huge debts during the crisis caused by the coronavirus pandemic. They will also not be fully applied again until 2024 due to the consequences of the war in Ukraine.
Source: Europa Press
