EU Moves to Penalize Excessive Budget Deficits

Bulgaria in EU | October 19, 2010, Tuesday // 15:00|  views

EU ministers of finance meeting in Brussels Monday have agreed to propose long-debated legislative measures automatically penalizing member states with excessive deficits and great debt.

Under the new rules, governments will be automatically penalized if they budgets exceed a 3% limit of deficit and they fail to bring it back below 3% within six months.

Also, penalties are previewed for countries whose debt is over 60%. Those countries with debt over 60% will be presented with a binding schedule for deficit reduction.

The BBC notes that as things stand now most of the Eurozone countries do not meet the 60% limit, with some of them well above it, while almost all of them are above the 3% limit for the budget deficit.

The agreement marks a softening of stance on the part of France and other member states such as Poland, who have argued for softer measures. The main advocate of the new penalties was Germany.

Nevertheless, the proposals have to be fleshed out in legislative texts in a long procedure, and the precise legislative form is to be determined.

A further setback are uncertainties whether the reforms will involve an admendment to the Lisbon Treaty.

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Tags: EU, budget deficit, debt, Eurozone, Finance Ministers

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