European Union (EU) finance ministers are expected to meet in an extraordinary meeting within two weeks after the expected disagreement this Friday over budget rules, with debt and deficit ceilings, European sources said.
The information was provided to Lusa by several European sources close to the discussions, after an informal dinner on Thursday night, which lasted until 03:00 (local time, minus one in Lisbon) and in which They maintained their positions among the 27 ministers. “very distant”, so it was not possible to reach a political agreement on the reform of the economic governance framework.
Discussions continue this morning at the formal Ecofin meeting in Brussels, but several European sources told Lusa that “there will be no agreement today”, so an extraordinary meeting of the EU Economy and Finance Ministers should be scheduled in two weeks, the previous week. Christmas.
This Friday, upon arrival at the Ecofin meeting, the vice president of the Spanish Government, Nadia Calviño, who leads the negotiations on behalf of the Spanish presidency of the Council of the EU, admitted an “extraordinary Ecofin with a view to concluding” the agreement on the legal text before the end of the year”, guaranteeing that the 27 ministers have already reached an “agreement in principle on a consensus area”, but there are still “some details to be finalized”.
On the table is a proposal from Spain that provides for a minimum average debt reduction of at least 1% annually for countries with a debt ratio greater than 90% of the Gross Domestic Product (GDP) and 0.5% for those between this level and the ceiling. of 60% of GDP.
The Spanish proposal also defends a target of reducing the deficit to 1.5% as a safety margin, even if the public accounts deficit is below the ceiling of 3% of GDP.
These demands were imposed by a group of “frugal” countries led by Germany, which has always asked for quantitative targets against debt, but are contested by countries such as Italy and France, which demand greater flexibility, according to European sources.
France immediately admits that structural adjustment should be reduced from 0.5% of GDP to 0.3% for countries that commit to investments and reforms, but Paris’s suggestion is not well received by Berlin, according to the same sources.
On Thursday, the Portuguese Finance Minister, Fernando Medina, stated that “more steps are necessary”, without anticipating an agreement in the EU on the new budget rules, admitting that there is still no consensus.
What is certain is that, taking into account the European elections of June 2024, this file should already be “closed”, given the time necessary for negotiation by the co-legislators (European Council and Parliament).
The discussion arises when these budget rules are expected to be resumed next year, after the suspension due to the Covid-19 pandemic and the war in Ukraine, with a new formulation despite the usual ceilings of 60% of GDP for public debt. and 3%. of GDP due to deficit.
Portugal has been defending the introduction of a countercyclical nature in this reform, so that, in times of greater economic growth, countries make a greater effort to lower public debt and, on the other hand, have slower rates of reduction in times of GDP more content.
The negotiation is based on a proposal from the European Commission, published 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 reduce the deficit and debt.
Source: TSF
