Brussels (Brussels Morning) The European Commission is to start discussions on EU budget rules when it reviews the Stability and Growth Pact on 19 October.
The EC will present its assessment of the impact of coronavirus crisis on the EU economy before launching the debate on how the rules should be changed, according to a Reuters report on Tuesday.
The Growth and Stability Pact sets government borrowing limits and protects the value of the euro, but the rules have been suspended until 2023 to provide room for EU member states to minimise the negative effects of the coronavirus crisis.
European Commissioner for Economy Paolo Gentiloni noted at a press conference on Monday that “the Commission plans to adopt on 19 October a communication that will assess the impact of the crisis and its implications for the economic governance review.”
He stressed the need for “a wide-ranging and inclusive engagement with all stakeholders” in order to achieve “consensus on the way forward well in time for 2023”.
The rules have been growing increasingly complex due to revisions implemented following the introduction of the euro in 1999.
Many EU member states have called for the rules to be simplified and updated in order to bring them into line with the current situation, pointing out that it has been more than two decades since the original rules were drawn up.
Government debts have ballooned
Gentiloni cautioned that the EU will have to address the issue of the substantial public debts that EU member states have accumulated throughout the crisis.
According to current rules, government deficits may not exceed 3% of GDP and debts must stay below 60% of GDP. If debt exceeds the threshold, it has to be lowered by 5% of the excess annually.As the average government debt in the eurozone now stands at roughly 100% of GDP, the EC acknowledges that the rules have become impractical, making it all the more important to find ways to tackle the problem while convincing markets that eurozone debt is sustainable.