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This marks the most comprehensive reform of economic governance rules since the aftermath of the financial crisis, European Commission said in a press release.
To achieve these goals, the proposed rules will facilitate necessary reforms and investments, while gradually reducing high public debt ratios in a sustained manner, in line with president Von Der Leyen's 2022 State of the Union address. The reforms will also make economic governance simpler, improve national ownership, place greater emphasis on the medium-term, and strengthen enforcement within a transparent common EU framework.
The reforms are the result of an extended period of reflection and broad consultation process. The cornerstone of the proposals is the design and presentation of national medium-term fiscal-structural plans that will set out fiscal targets, measures to address macroeconomic imbalances, and priority reforms and investments over a period of at least four years.
These plans will be assessed by the commission and endorsed by the European Council based on common EU criteria. Integrating fiscal, reform, and investment objectives into a single medium-term plan will create a coherent and streamlined process. It will also strengthen national ownership by providing member states with greater leeway in setting their own fiscal adjustment paths and reform and investment commitments.
The proposals seek to move towards a more risk-based surveillance framework that puts public debt sustainability at its core, while promoting sustainable and inclusive growth. For each member state with a government deficit above 3 per cent of GDP or public debt above 60 per cent of GDP, the commission will issue a country-specific ‘technical trajectory’.
The proposals also aim to facilitate and encourage member states to implement important reform and investment measures. Member states will benefit from a more gradual fiscal adjustment path if they commit in their plans to a set of reforms and investment that comply with specific and transparent criteria.
While member states will have more control over the design of their medium-term plans, a more stringent enforcement regime will be put in place to ensure they deliver on the commitments they undertake. For member states that face substantial public debt challenges, departures from the agreed fiscal adjustment path will by default lead to the opening of an excessive deficit procedure, the release added.
Swift agreement on revising the EU fiscal rules and other elements of the economic governance framework is a pressing priority at the current critical juncture for the EU economy. The council, in conclusions also endorsed by the European Council, has welcomed the proposals and calls on member states to work towards their swift implementation.
Fibre2Fashion News Desk (DP)