Samstag, 17.11.2018 13:44 Uhr

EU Commission and Draft Budgetary Plans

Verantwortlicher Autor: Carlo Marino Rome, 26.01.2018, 14:38 Uhr
Presse-Ressort von: Dr. Carlo Marino Bericht 7732x gelesen

Rome [ENA] According to Italian Press Agency ANSA, the president of the European Central Bank Mario Draghi declared on 25th of January that: "Notable" monetary stimulus is still needed in the Eurozone”. Draghi also said Eurozone growth has been vigorous and that the euro's volatility was creating uncertainty. Inflation seems to remain at or about current levels. Draghi also urged member countries to increase efforts in order

to implement structural reforms. In other remarks, Draghi said quantitative easing (QE) did not favor any country in particular and that "growth is going well but it's too soon to sing victory". On the other hand, there is a detailed outline on the European Commission opinions concerned the 2018 Draft Budgetary Plans submitted by Euro Area Member States in accordance with EU Regulation 473/2013 . This report concerning the Draft Budgetary Plans of the Member States evaluated various of them are "at risk of non-compliance" with their nominal and structural targets (concerning public deficit and debt).

On 22 November 2017, the European Commission concluded as part of its opinions on the 2018 Draft Budgetary Plans that six Euro Area Member States are at “risk of non-compliance” with their current obligations under the Stability and Growth Pact, to be exact: France in the corrective arm and Belgium, Italy, Austria, Portugal and Slovenia in the preventive arm of the Stability and Growth Pact. This represents an improvement compared to the opinions on the final 2017 Draft Budgetary Plans, which concluded that seven Euro Area Member States where at “risk of non-compliance”. This decreasing number of countries at “risk of non compliance” is the result of the fact that three Member States have left the category “risk of non-compliance”

Cyprus, Lithuania and Finland), while two countries (France and Austria) have become part of it. For Belgium and Italy, the European Commission opinions estimate that the debt reduction benchmark will be breached based on current projections. They imagine the same for France, in case France moves from the corrective to the preventive arm of the Stability and Growth Pact in 2018 and would thus become subject to the transitional debt rule as of 2018. In a letter of 22 November 2017 to the Italian authorities, the European Commission informed about its intention to review Italy's compliance with the debt reduction benchmark in spring 2018.

The provisions will be crucial, as will its subsequent strict implementation to deliver a structural effort of at least 0,3 % of GDP. The European Commission underline the importance of avoiding to do a volte-face on the important fiscal structural reforms, particularly as regards pensions, which underpin the long-term sustainability of Italy’s debt.The European Commission emphasized in letters (of 27 October 2017) to Belgium, France, Italy and Portugal the potential non-compliance (“significant deviations”) of their Draft Budgetary Plans with the requirements under the Stability and Growth Pact and asked the respective governments to present further information so that the European Commission can utilize it in its final opinions on

the Draft Budgetary Plans. The replies of 30/31 October 2017 (Belgium, France, Italy and Portugal) focused on fiscal measures and structural reforms which were not in the calculations of the structural balance by the Commission (“no policy change scenario”) or on methodological issues (particularly Italy). However, they did not change the general Commission compliance assessments on these countries.

On 4 December 2017, the Eurogroup took note of the Commission assessments of the 2018 Draft Budgetary Plans. It invited Member States at “risk of non-compliance” to consider in a well-timed manner the indispensable additional measures to address the risks identified by the Commission and to ensure that their 2018 budget will be compliant with Stability and Growth Pact requirements. Last but not least, the Eurogroup noted that the limited structural fiscal adjustment expected in 2018 in some Member States is alarming, in particular when coupled with high sustainability risks.

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