–New Rules Will Come In To Force In 2011, Start In March Each Yr
BRUSSELS (MNI) – European finance ministers agreed at a meeting
here Tuesday to review their budgets in tandem, by introducing a
European budget semester.
The new rules will ensure that all countries put their budgets
together at the same time and that the European Commission and Council
have a say in the budgets at an earlier stage.
The semester is part of a wider package of ideas currently being
discussed, which are aimed at strengthening surveillance in the EU.
“This initiative will allow the economic and budgetary policies of
the member states to be monitored in parallel during a six-month period
every year, starting in 2011, so as to detect any inconsistencies and
emerging imbalances,” the Council of European finance ministers said in
a statement.
The statement said the new monitoring cycle will start each year in
March.
Under the new process, the European Council will set out the main
challenges facing a specific country in March each year, based on a
Commission report. The member state will take this advice into account
when drawing up its budget in April, the statement said.
The budgets will then be reviewed by the EU’s other 26 countries in
June and July of each year before they are finalised.
The European Union’s rules – as set out in the Stability and Growth
Pact – stipulate that each country must limit its annual budget deficit
to 3% of its GDP, and its total debt to 60%. The European Commission is
in charge of enforcing those limits but doesn’t have the political clout
or instruments to do so effectively.
Blatant flouting of the rules by some countries led to a sovereign
debt crisis in May this year, as investors worried that some countries
had run up such large debts that they ran the risk of defaulting.
–Brussels: 0032 487 (0) 32 803 665, echarlton@marketnews.com
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