Tag Archives: Stability and Growth Pact

Excessive Deficit May Prompt Suspension of Regional Aid?

The European Commission considers suspending structural funds for states which are regularly in breach of the EU’s stability and growth pact. An additional criterion being considered is a public debt ratio above 60% of GDP. The Commission also plans to deepen and broaden budgetary surveillance in the future.

I can follow the logic of the Commission in desiring to impose a budget discipline in the EU, but I am particularly worried about Bulgaria. As we already know, there probably will be an excessive deficit procedure against Bulgaria for 2009 and possibly for 2010. True, the gross public debt is relatively small. But even now we face substantial problems in using the structural funds. Any further restriction or suspension of regional aid by the Commission can be devastating for a country that simply is not competitive enough on the EU markets.

Deadlines for the Correction of Budget Deficits

The European Commission has proposed deadlines for the correction of the budget deficits of Greece, Spain, France and Ireland to the Council. EC also proposed a new deadline for the correction of the excessive deficit in the UK.

This is an important step forward in the procedure. Once the deadlines are approved by the Council, the Member States concerned will have six months to take effective action regarding budgetary outcomes in 2009 and to specify the measures that will be necessary to progress towards the correction of the excessive deficit.

We have to observe very carefully this procedure, since it will provide evidence about the practical enforceability of the Stability and Growth Pact.