Stability pact, now more gradual rules. Giorgetti: “Realistic targets” – Corriere.it

A fundamental step for Economy Commissioner Paolo Gentiloni. Now the goal is to conclude the legislative work by 2023, said the vice president of the EU Commission Valdis Dombrovskis. Ecofin yesterday approved the conclusions on the basic principles for the reform of the Stability and Growth Pact after intense discussions, Swedish Finance Minister Elisabeth Svantesson explained at the end of the meeting. Svantesson stressed that the document highlights areas of convergence of views but that further clarification and discussion is needed in some areas.

internal divisions

It is no mystery that the EU countries are divided on some points and are awaiting the legislative proposal, which will be presented by the EU Commission immediately after the European Council of 23 and 24 March, to start the real confrontation, which will be the most difficult. Economy Minister Giancarlo Giorgetti highlighted that the final text envisages, as we had hoped, that the new reform be approved within the year in order to face the 2024 transition in a realistic manner and with achievable objectives. It was also very important for the minister to have reaffirmed national responsibility in the medium-term budget plans of individual countries and said he was aware and respectful of the different visions and concerns of some countries such as Germany.

States with high public debt: gradual repayment in exchange for reforms

But it is essential for Italy that future fiscal rules promote investments in all strategic sectors, including the environment, digitization and defence. German Finance Minister Christian Lindner said further work was needed to ensure the outcome was a proposal that everyone supported. Germany like Holland and the Nordics want predefined annual quantitative parameters for the reduction of the public debt. The EU countries have reaffirmed the limit of 3% of the deficit to GDP and of the debt to 60% of GDP. States with high public debt will negotiate with the Commission a gradual recovery in exchange for reforms and investments lasting from four to seven years (although the time frame is not mentioned in the ministers’ document). To simplify the rules, the indicator to observe will be net primary expenditure. There are national safeguard clauses (in addition to the general one) in case of particular economic shocks. For the frugal, transparent and effective rules are needed. Monetary sanctions should be reduced to allow for realistic enforcement.