European Union (EU) finance ministers yesterday reached an agreement on future rules for economic governance in the eurozone. The agreement was finalized during an extraordinary meeting, via videoconference, coordinated from Madrid, by the Spanish Minister of Economy, Nadia Calviño.
The Spanish minister welcomed the agreement “balanced, realistic and adapted to current and future challenges”, which also allows the Spanish government to “end the presidency”. [rotativa do Conselho da UE] with a golden key”.
The agreement, which is “the result of intensive work” over the past months, culminating in a final “effort” in a two-hour meeting, “provides the necessary certainty and confidence to the financial markets,” the minister said, confident that “it also provides clarity and confidence to citizens, allowing us to continue to make progress in terms of prosperity and sustainable growth”.
The plan that received political approval from the 27 is based on “budgetary responsibility”, but provides for “countercyclical policies that protect the necessary investments for the future”, the minister emphasized.
“It ensures a sustainable and gradual reduction in deficit and debt ratios, with a countercyclical effect, and protects public investments in the priority areas of the European agendas, in the green, digital, social and defense domains, for safer, more sustainable growth and also for more inclusive,” explains Nadia Calviño.
The minister believes that the rules now adopted by the 27 are better adapted to the current and future requirements of economic governance in the EU, and adapt “to the specific situation of each country”. In other words, there will be “an approach based on risk and budgetary and financial sustainability in the medium and long term and a system of rules that focuses on a single indicator, namely the growth trajectory or evolution of expenditure”.
“The rules also provide for a transitional regime until 2027, which will mitigate the impact of the rapid increase in interest rates and its impact on interest costs on public debt, thus protecting the fiscal space needed to continue and sustain the necessary investments to develop.” Calvino added.
In the proposal presented in April, Brussels proposed that the measures would consist of issuing specific “technical pathways” for each country, in the case of member states “with a public deficit of more than 3% of GDP or a public debt of more than 60% of GDP, to “ensure” that the debt is steered towards a “downward trajectory or remains at a prudent level” while at the same time “maintaining the medium-term deficit or reduced and kept below 3% of GDP”.
In cases where Member States have a general government deficit below 3% of GDP and public debt below 60% of GDP, “the Commission would provide technical information (…) to ensure that the general government deficit remains below the reference level “. value of 3% of GDP, also in the medium term”.
The discussions have intensified in recent months and started during the Swedish Presidency of the EU Council. Germany, supported by the so-called frugal group, began imposing quantitative targets and demanding safety margins stricter than the three percent limit.
The Spanish Presidency’s proposal provided for an annual debt reduction of at least 1% for countries with a debt above 90% of GDP. For countries with a debt above 60%, the reduction trajectory would be 0.5% per year. Spain also proposed imposing a deficit limit well below 3% of GDP, as the margin as a safety measure should not exceed 1.5%. France proposed establishing a relationship between structural adjustment and the commitment to reforms and investments, with lower limits.
European Commission Vice President with economic portfolios Valdis Dombrovskis welcomed the political agreement on the overhaul of economic governance, which was only reached “after many weeks of intensive negotiations”.
“There is no time to lose if we want the EU’s new fiscal rules to be implemented before next year’s European elections, given the significant economic challenges we face,” Dombrovskis warned, stressing that the EU should “do this framework that ensures fiscal sustainability and sustainable and inclusive growth, through greater ownership and implementation [de medidas]differentiation based on risks and incentives for investment and reform”.
Valdis Dombrovskis thanked the “excellent work and tireless commitment” of Minister Nadia Calvino and her team “to achieve this result”, stating that the agreement “marks a fitting end to the Spanish presidency”.
Source: DN
