Presseaussendung

The current efforts of European ministers of finance to reform the Stability and Growth Pact (SGP) raise the concern that the rules of the SGP aimed at ensuring budget discipline in Europe will be relaxed substantially. In particular, the list of extraordinary circumstances to be taken into account in assessing the existence of excessive deficits is to be expanded significantly. A number of budget items, notably research and development expenditure, net contributions to the EU budget and German reunification costs, are to be exempted.

The numerous proposed exemptions and the ad hoc discretionary scope for decision-making would render the SGP far more complex and would make its strict implementation more difficult than ever. The 3% deficit limit of the Maastricht treaty would be diluted, and it would become very difficult to maintain a level playing field across the EU. Transparency vis-à-vis the general public would be largely forfeited. This might ultimately result in a loss of trust in the stability of the European operational framework and possibly also in the euro. This would damage the credibility of European unification as a whole and could be a bad example for the new Member States.

The current fiscal rules of the Maastricht Treaty and of the SGP are key pillary of the European stability architecture and are hence instrumental for the smooth functioning of monetary union. Without transparent fiscal rules, the financial markets play a greater role in imposing discipline. A plausible scenario could involve higher interest premiums for all euro area countries, and the expected higher deficit and debt ratios would reduce the scope for absorbing the cost of population aging.