On Monday, April 29, the Council of the European Union approved a comprehensive package of rules on economic governance, including strict rules on sovereign debt and fiscal policy.
The new rules that Romania must respect
The EU Council announces that the main objective of the reforms is to ensure a healthy and sustainable public finance environment, while promoting sustainable and integrated growth in all member states through reforms and investment.
Vincent Van Peteghem, Deputy Prime Minister and Finance Minister of Belgium, who holds the six-month Presidency of the EU Council, said the new laws:
- will significantly improve the existing framework
- they will provide effective and applicable regulations for all member states
He emphasized that they will guarantee balanced and sustainable public finances, intensify the focus on structural reforms and investments to stimulate economic growth and job creation throughout the European Union.
He also highlighted that it is time for the rapid implementation of the measures.
“The new laws will significantly improve the existing framework and provide effective and enforceable regulations for all member states.
They will guarantee balanced and sustainable public finances, intensify the focus on structural reforms and investments to stimulate economic growth and job creation across the European Union. It is time for the rapid implementation of the measures”, said Vincent Van Peteghem, Deputy Prime Minister and Minister of Finance of Belgium, the country that exercises the six-month Presidency of the Council of the EU.
The purpose of the new set of measures
The overall aim of this set of measures is to gradually reduce the proportion of sovereign debt and budget deficits in a realistic way and compatible with economic growth.
At the same time, it is envisaged to protect reforms and investments in strategic areas, such as:
- Digital
- Ecology
- and in matters of defense
According to the new rules, all EU member states must draw up structural term fiscal plans for a period of four to five years. The period must be adapted to the duration of the regional legislatures.
These plans will include investment and reform initiatives designed to address the main challenges identified in the European Semester. Also, evaluations of specific recommendations will be taken into account.
Before implementing the reforms, the European Commission will propose a “reference trajectory”. This will help to adjust government spending if the sovereign debt exceeds 60% of GDP and the budget deficit is above 3% of GDP.
The baseline takes into account the sustainability challenges specific to each country. It sets out how Member States can ensure that government debt:
- is headed for a credible downtrend
- remains at prudent levels in the medium term
“The baseline takes into account each country’s sustainability challenges and indicates how member states can ensure that by the end of the four-year adjustment period, government debt is placed on a plausible downward path and remains at prudent levels in the medium term”, emphasizes the EU Council.
