The economy | The IMF urges the EU to reform its fiscal policy, proposes more joint borrowing

International the International Monetary Fund (IMF) urges the European Union to put its fiscal policy rules into a new faith. According to the IMF, the reforms are critical in order to prevent debt crises that “threaten the EU itself”.

The IMF is proposing, for example, a new financial instrument that would be created by the EU’s joint debt assumption. The new financial instrument would be based on a similar idea to the 750 billion euro recovery package launched by the EU due to the corona pandemic.

According to the IMF, the new instrument could, for example, finance the fight against climate change or improve the EU’s energy security. The purpose of the money would be to manage the effects of economic upheavals on the member countries.

News agencies, among others, report on the matter Bloomberg and Reuters.

IMF also suggests that the rate of debt servicing of countries should be linked to the significance of the country’s economic risks. The bigger the risks and debts are, the faster the economy should be balanced.

“In the next 3-5 years, the countries with the highest risk should move towards a zero level or a budget surplus”, the IMF stated published on Monday in a blog post.

According to the current economic rules of the EU, the budget deficit of a member state should not be greater than three percent of the gross domestic product. A budget deficit occurs when the government’s annual expenditures exceed annual revenues.

According to the second rule, the public debt must be less than 60 percent in relation to the member country’s gross domestic product.

Corona pandemic During this period, the countries of the euro area have taken on debt rapidly, and the debt level of many countries is higher than the EU’s economic rules. Debt levels also vary widely.

The European Commission is scheduled to announce its own proposal to reform the EU’s fiscal policy in the coming weeks.