Belgium, (Brussels Morning Newspaper) The EU is still split on the European Commission’s plan to reform the bloc’s debt rules and adapt them to new economic realities.
While EU finance ministers are getting closer to an agreement on broad principles, they still disagree on important details, according to a Reuters report on Tuesday.
Draft conclusions of the Tuesday meeting of finance ministers show that bloc members do not agree on the practical implementation of EC’s proposal from November last year.
According to the proposal, the limit on budget deficits of 3% of GDP and debt of 60% of GDP would remain in place. Bloc members whose debt exceeds limits would present the EC with plans to rein in debt and negotiate individual paths.
This presents a departure from the EU’s one-size-fits-all rules according to which all EU member states have to make annual debt reductions of at least 5% of the excess over 60% of GDP.
Individual negotiations with the EC would be based on the Commission’s debt sustainability analysis, with bloc members allowed four to seven years to put their debts on a downward path.
EU member states could get more time from the EC to bring their debt under control if they agree to implement reforms aimed at strengthening the green push or digital transition.
The proposal includes an “escape clause” that would allow countries to deviate from negotiated debt reduction in case of economic shocks outside its power.
Open issues
One of the main points of contention is the methodology of the EC’s debt sustainability analysis which would limit the spending and borrowing of EU member states.
Negotiators also disagree on bloc-wide benchmarks for the reduction of debt as bloc members would negotiate individual plans. Other points of contention include new requirements for countries without major debt issues and enforcement of agreed plans and more.
One eurozone official noted that EU finance ministers are to reach an agreement on broad principles, after which EU leaders are to support the agreement at the summit later this month.
The official stressed that the EC will start drafting proposals on open issues after the summit and pointed out that “that’s when the real discussions will start.”
