Oct. 29 (Bloomberg) -- European Union countries that are given extra time to meet the bloc’s budget targets should use that leeway period to push through economic reforms, the European Commission said.
The EU’s executive arm said countries that are granted more time to bring their budget deficit below 3 percent of gross domestic product, as required by the bloc’s rules, are expected to implement policy changes in return. The commission was responding to remarks made yesterday by Dutch Finance Minister Jeroen Dijsselbloem, who called for specific conditions to be imposed on countries if their deadline is extended.
“If a member state has been given a deadline extension for excessive deficit there’s obviously the expectation that they take the necessary steps and the necessary additional structural reforms,” Chantal Hughes, a commission spokeswoman, told reporters today in Brussels.
The Netherlands, together with Spain, France, Poland, Portugal and Slovenia, won extra time in May to meet deficit goals. The commission is currently scrutinizing draft budgets for each of the euro-area countries apart from those in a bailout program, after nations with the strongest fiscal positions, such as AAA rated Germany, demanded oversight at EU level.
In an e-mailed statement, the commission said that all countries for which the EU recommended a deadline extension should use the time to implement structural reforms. It said that under tougher budget rules introduced in May countries under surveillance for excessive deficit had to identify specific measures to ensure that the deficit is kept under control.
For Dijsselbloem, who leads the group of euro-area finance ministers, the stricter rules do not go far enough. He said that deadline extensions were “now granted without any conditions.”
“The agenda should be based on more than just peer review and peer pressure,” he said in a speech in Madrid.
“In future cases, I propose to link deviation of fiscal targets in the stability and growth pact to the concrete achievement of reforms,” he said. “In other words only if a country pushes forward crucial reforms can the deadline for fiscal targets be extended.”
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