Brussels (agencies)
Negotiators from the European Parliament and EU member states have agreed to introduce reforms to the bloc's debt rules after long negotiations.
Belgian Finance Minister Vincent Van Petegem said the new rules “will protect balanced and sustainable public finances, strengthen the focus on our structural reforms, and boost investments, growth and job creation across the European Union.” Belgium currently holds the rotating presidency of the European Union.
He added that the current goal is “rapid implementation,” according to a press release from the Council of the European Union. The reforms aim to improve the study of the individual financial situation of each European Union country and allow heavily indebted member states more flexibility to reduce debt and budget deficits.
At the same time, the reforms include setting minimum requirements for lowering debt ratios for highly indebted countries.
Although EU finance ministers reached an agreement at the end of last year, they still have to negotiate it with the European Parliament. Reaching the agreement was a controversial process, especially from Germany and France. The agreement reached was based on reform proposals by the European Commission, which were criticized, especially by the German government, as being too lenient.
After months of negotiations, EU member states agreed on a number of changes, including minimum requirements for lowering debt ratios. In principle, the standards of the previous regime still exist. Current EU government debt rules limit total borrowing to no more than 60% of a country's GDP, and require the annual budget deficit to remain less than 3% of GDP. If the deficit limit of 3% is violated, countries are still required to achieve an annual structural improvement of no less than 0.5% of GDP.
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