EU finmins to back previews of national budgets: draft

By Jan Strupczewski

BRUSSELS (BestGrowthStock) – European Union finance ministers will back on Tuesday a call for national budgets to be first reviewed by EU ministers before they are submitted for parliamentary approval, draft conclusions of the meeting showed.

The European Commission proposed last Wednesday that draft national budget plans should be vetted by the Commission and EU finance ministers to check if they are in line with the 27-nation bloc’s economic policy guidelines.

“In light of their contribution to an efficient implementation of the Stability and Growth Pact, the Council calls for a regular assessment and peer review of Member States’ fiscal frameworks,” draft conclusions of the ministers, obtained by Reuters, said.

The Commission proposal is part of a package of changes aimed at strengthening economic cooperation in the 27-country bloc in light of Greece’s debt crisis.

Such a peer review of a government’s budget draft, before it is set in stone by a vote in the national legislature, would give the ministers a chance to discuss budget trends that go against agreed EU fiscal rules, called the Stability and Growth Pact.

It would also give other ministers an early warning on planned budgetary developments that have an impact beyond the borders of a single country, like value added tax changes.

The peer review of budgets would use a checklist of desirable features of a budget, building on best practices and acknowledging political, institutional and cultural differences between countries, the conclusions said.

During such reviews, countries with more experience and success in fiscal reforms could share their experiences with others. It would also be an opportunity to analyze the impact of the crisis on current budgets and ongoing reforms, the draft conclusions said.

France and Germany, Europe’s two biggest economies whose support is vital for any major policies in the EU, last Wednesday welcomed the overall direction of the Commission’s proposals, which also included swifter sanctions for breaching the EU’s budget rules.

But Paris and Berlin also underlined that national parliaments’ sovereignty would remain intact.

Under EU rules, deficits must not exceed 3 percent of gross domestic product and debt must not be more than 60 percent of

GDP.

But just three countries are expected to meet the deficit criterion this year and only 13 are likely to comply on debt.

This has caused financial markets to doubt the credibility of EU budget rules and pushed up borrowing costs for some EU member states, increasing fears of a sovereign debt crisis.

Stock Market Report

(Editing by John Stonestreet)

EU finmins to back previews of national budgets: draft