On Friday, 10 September, an informal meeting of the European Union (EU) Economic and Financial Affairs Council (ECOFIN) set up a group of member states to advocate for fiscal discipline in post-pandemic situations without seeing it as an obstacle to effective fiscal policy. The initiative’s think tanks are Austria, Finland, Latvia, Sweden, the Netherlands, Slovakia, Denmark and the Czech Republic.
Unprecedented fiscal measures have helped to address the significant negative economic effects of the Covid-19 crisis, while affecting the sustainability of public finances in many EU countries. Negotiations on fiscal rules in Europe have often offered to relax them. Given that sound public finances are at the heart of EU action and the cornerstone of monetary union, the new group is in favor of maintaining fiscal sustainability, combined with growth-enhancing reforms, at the heart of the EU’s common economic and fiscal policies.
Sustainable public finances create fiscal space for priorities and provide opportunities to support job creation and prosperity. Reducing excessive debt must therefore remain a common goal for Member States.
Minister of Finance Jānis Reirs acknowledges: “The example of EU countries, as well as our immediate neighbors, shows that the path to prosperity is not about living on debt, so fiscal sustainability is also important in a post-pandemic context.”
Finance ministers agreed to be open to discussions on improving the Stability and Growth Pact by promoting transparency and better regulation. It is essential that changes in fiscal rules do not affect the fiscal sustainability of Member States, the euro area and the EU as a whole. Ministers also agreed that quality is more important than speed, so the current economic governance policy must be implemented in consultation with the European Commission and it will take time. The abolition of the general development clause should not be linked to possible amendments to the Stability and Growth Pact.
The ECOFIN meeting will take place from 10 to 11 September in Kranj, Slovenia. The Minister of Finance Jānis Reirs and representatives of the Ministry of Finance participate in it.
MINISTRY OF FINANCE
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