The president of the European Central Bank (ECB) on Monday called for a “timely adoption” of the reform of Europe’s fiscal rules, with an agreement by the end of the year, urging an end to member states’ support for the economies as a result of the energy crisis.
“A solid framework for economic governance is largely in our common interest, and an agreement on reforming the EU’s fiscal framework should be reached by the end of the year. […] The time has come to move forward with this file and I am counting on it […] a timely adoption,” said Christine Lagarde.
During a regular hearing in the European Parliament’s Economic and Monetary Affairs Committee, the ECB president stressed that “there is still important legislative work to be done before next year’s elections”, referring to the reform of the EU’s fiscal rules , involving debt and deficit ceilings, but also the completion of the banking union and the capital markets union and the introduction of the digital euro.
According to Christine Lagarde, the new rules for public debt and deficits in the EU should ensure “lower public debt and less heterogeneity in debt levels between countries”, but also “higher growth and greater countercyclicality of fiscal policy”.
In this intervention, the official reiterated previous calls: “As the energy crisis recedes, governments should continue to reduce related support measures to avoid rising inflationary pressures over the medium term.”
“At the same time, fiscal policy should aim to make the eurozone economy more productive and gradually reduce high public debt,” he stressed.
This position comes when the recovery is expected in 2024, after the suspension due to the pandemic and the war in Ukraine, with a new formulation despite the usual ceilings of 60% of gross domestic product (GDP) for public debt and 3% of GDP. for the shortage.
Portugal has defended the introduction of a countercyclical nature to this reform, so that countries can make greater efforts to reduce public debt in times of greater economic growth and can instead achieve slower reduction rates in times of more limited GDP.
The discussion is based on a European Commission proposal, released last April, for risk-based fiscal rules, with a technical and personalized path for indebted EU countries such as Portugal, giving them more time to tackle the deficit and reduce debts.
Source: DN
