Deploying the new fiscal rules that the EU has adopted will require “significant” fiscal adjustments in many Member States. The International Monetary Fund (IMF) goes straight to the point in its conclusions on the euro zone, published this Thursday: it warns of the intensity of the budgetary effort that will have to be made and emphasizes that it will be unequal, because it will fall more on countries with volumes of debt very high, Spain among them, than in those with a lower burden. The latter, he recalls, “will have more margin.” And this will not be easy to develop, hence the body headed by the Bulgarian Kristalina Georgieva emphasizes the need for “sustained political support”, support both within each State and by the Governments in the institutions of the Union that The European Commission and the Council of the EU have the most role in its application.
The IMF report, which Georgieva presents to the Eurozone Economy Ministers this Thursday, addresses several of the risks that threaten the monetary area. It lists the low growth, the loss of competitiveness compared to other areas, the risks that the trade fray will worsen or the danger that opening its hand with State aid will crack the single market. But he points out very quickly the challenge that the EU faces in the coming months: the medium-term fiscal plans that must begin to be negotiated in September between Brussels and the Member States, and “be based on a clear fiscal strategy and on structural reforms that foster growth and resilience.”
In Washington, headquarters of the multilateral organization, they have even thought about the cadence that the plans themselves should have for the countries with the most debt (Greece, Italy, France, Spain, Belgium, Portugal). They propose “a more concentrated fiscal adjustment in the initial phase” because “it would support market confidence and create room for future spending surprises.”
In April, the reform of fiscal rules was definitively approved. They are already in force. Now is the time when each State must begin to prepare its plans – based on the debt sustainability indicator prepared by Brussels – and negotiate them with the European Commission to send its final proposals in the second half of September. The objective is to receive approval then and thus condition the preparation of the 2025 budgets, whose drafts must arrive in the community capital on October 15.
Unequal adjustment by nations carries the risk of indirectly breaking up the single market at a time when public (and private) investment is necessary so that Europe is not left behind compared to the United States and China. Hence the IMF, following the discourse most heard in Brussels in this area since former Italian Prime Minister Enricco Letta presented his report on the EU’s internal market, points out that “without further integration of financial markets, Europe “Not only will it fall far short of its energy security goals, mitigate the climate pathway and advance the digital transition, but it is at risk of falling behind its global peers.” The inspiration of Letta report It is even appreciated when it points to some specific measure. “An integrated capital market would benefit from reinforcing the role of ESMA [el coordinador europeo de supervisores bursátiles de la UE] to coordinate national authorities and greater harmonization on issues such as bankruptcies, taxes, accounting and legal frameworks,” the fund suggests.
The report presented by Georgieva, former Commissioner of the Commission, avoids the conflictive option of the EU issuing joint debt to finance some of the public goods required by the double transition (ecological and digital) and the new era of reinforced security. However, it does recommend taking advantage of the Union’s next multiannual budget (2028-2035) to prioritize public spending on the elements that should help achieve the objectives that the Twenty-seven have set. As in the case of fiscal plans, the IMF once again launches a recommendation taking into account the community calendar, since the budgetary framework to which it refers must begin to be negotiated when the next College of Commissioners starts up, something that will foreseeably happen. in the last quarter of this year.
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