EU finance ministers discuss ideas for future budget rules

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EU finance ministers discuss ideas for future budget rules

European Union finance ministers discussed in Prague on Saturday different approaches to reform the bloc’s joint budget rules, reported dpa.

The EU’s usually strict debt and deficit rules have been largely suspended since the Covid-19 pandemic prompted even frugal countries like Germany to take on large amounts of public debt.

"Rules have to be clear and they have to be enforceable. That means they have to be realistic," said Czech Finance Minister Zbynek Stanjura, who chaired the talks, adding that positions among EU countries still diverge.

The EU is planning to go back to budget discipline from 2024 but the war in Ukraine, the changed geopolitical and economic outlooks, and large investments needed to fight climate change raise the question of what future rules should look like.

Economy Commissioner Paolo Gentiloni said earlier this week he could envisage having EU capitals draw up medium-term fiscal plans that would allow more flexibility on how quickly to reach a sustainable debt level, taking into account the necessary investments.

Berlin would be prepared to allow some latitude in the short-term if public debt is reliably reduced in the long run, German Finance Minister Christian Lindner said in Prague.

Lindner said in the past he wants to stick to the now-suspended long-term rules of the EU Stability and Growth Pact that oblige member states to not take on more than 60% of their economic output in debt and caps budget deficits at 3% of gross domestic product (GDP).

The European Commission is expected to present its legislative reform proposal next month which will be the basis for discussion among EU finance ministers to agree on common future rules.

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