BRUSSELS (MNI) – There is no doubt that the Europe’s debt and
deficit situation is serious and delicate but member states are taking
all the necessary steps, a European Commission spokesman said on Monday.

The spokesman reiterated that the 16 Eurozone countries have a
financial backstop in place, which could be used to aid heavily indebted
countries if they asked for it.

Speculation has mounted in recent weeks that the Irish government
will not be able to manage its debt burden on its own and will have to
tap the EU and International Monetary Fund for help. That has put
pressure on the sovereign debt spreads of several other high debt and
deficit countries, including Greece, Portugal and Spain, as markets
worry about a contagion effect.

There is “no doubt the fiscal situation in Europe is delicate,” the
spokesman said.

But he said that there was a “clear determination” by the member
states in question to take action to bring down their debt and deficit
levels.

“It is beyond any doubt that EU member states… are taking all the
necessary measures,” he said, stressing that the Eurozone has “the
necessary financial backstops” to safeguard the stability of the
currency area.

In Portugal a “very ambitious… indispensable budget has been
passed in parliament,” the spokesman said. He said the Irish government
has a “clear determination” to reduce its budget deficit.

In Greece, the government is sticking to a plan agreed between the
Greek government, the Commission, the European Central Bank and the
International Monetary Fund agreed earlier this year, he said.

“It is clear that there are tensions in the markets, it is clear
that the situation is serious,” the spokesman said, referring
specifically to the Irish case. “However, I would emphasise the banking
repair is a one-off exercise.”

Ireland’s government earlier this month outlined plans for E15
billion worth of budgetary savings over the next four years in a bid to
get its budget deficit below the EU’s 3% limit by 2014.

The budget deficit has widened to 32% of its GDP this year, due to
a costly bailout of the banking sector and worse-than-expected growth.
Stripping out the cost of the banks, the deficit is expected to be
around 11.9% this year, the largest in the Eurozone.

“I think that the European partners of Ireland acknowledge the
efforts being made since 2008,” the spokesman said.

Ireland has “shown their partners that when they commit, when they
present measures… they apply them,” he said.

“We have no reason to have doubts about the level of commitment,”
he said.

–Brussels: 0032 487 (0) 32 803 665, echarlton@marketnews.com

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