Public Finances in the EMU 2006 (debate)
President
The next item is the report by Mr Lauk, on behalf of the Committee on Economic and Monetary Affairs, on Public Finances in EMU 2006.
I would point out that Mr Schwab is standing in for the rapporteur.
Andreas Schwab
deputy rapporteur. - (DE) Mr President, Commissioner, at this late hour, I am pleased that we are speaking about the economic and monetary union of the EU. The European Parliament, in this report presented on its own initiative, expresses itself for the first time on the revised version of the Stability and Growth Pact, adopted by the Heads of State or Government in March 2005. The revision concerned both the preventive and the remedial elements of the Pact.
The aim of the Pact was and remains the avoidance of an excessive deficit and the achievement in the medium and long term of a balanced budget and sound public finances. The present report is an appraisal based on one year. The reference period, in other words, is very short - too short, in fact; moreover, it covers the year 2006, a year characterised by very favourable economic trends. These trends had a beneficial impact on the fiscal policies of the Member States. It goes without saying that an assessment based entirely on this brief period cannot be the last word. The real endurance test for the revised Pact awaits us in the coming years.
The report is an appraisal of the current situation. The rapporteur, Kurt Joachim Lauk, who unfortunately cannot be with us this evening, has deliberately avoided naming the various Member States and assessing their individual levels of performance. The point of this report was not to award exam marks; the rapporteur saw no value in that approach. What the report can usefully do is to make a general assessment of achievements to date.
The Committee on Economic and Monetary Affairs has dealt in great depth with this report, and our exchanges were highly constructive and fruitful. On behalf of Mr Lauk, may I offer a special word of thanks to Mr Rosati, shadow rapporteur for the Socialists, and to his Liberal counterpart, Mrs in 't Veld, for their close and constructive cooperation. The report was adopted by an overwhelming majority in committee.
I only intend to deal briefly with the main points. The statistical surveys show that the spread in deficit and growth levels is too wide as well as demonstrating a correlation between high deficits and low growth rates. The figures for 2006 show that the 21 Member States with low deficits or even slight surpluses also had high growth rates. This substantiates the view that reducing deficits stimulates activity and improves economic output, thereby cutting unemployment.
Against this backdrop, the report highlighted three key points. Firstly, the Committee on Economic and Monetary Affairs argues strenuously in this report that the economic good times should be used to put public budgets on a sound structural footing. The Member States must take advantage of the economic upturn, and particularly of increases in tax revenue, to reduce their public debts. We must keep reminding ourselves that a stimulation of growth leads to higher demand and higher employment levels. On a critical note, it must be said that the Member States are not making sufficient use of the favourable cyclical climate to consolidate their budgets.
Secondly, we call on the Member States to declare new public debt unconstitutional or unlawful by 2015, as has already been done by certain states and regions in the European Union. The amendment to paragraph 20 tabled by the rapporteur, Kurt Joachim Lauk, is designed to clarify the scope of this call. It states that what is being proposed is a binding obligation on the Member States within the euro zone alone, not on all 27 Member States of the European Union. This seems logical, and may I ask you on behalf of the rapporteur to approve this amendment, tabled on behalf of the PPE_DE Group.
Thirdly, the report calls for the Member States' debts and deficits to be calculated in such a way as to make the figures comparable. This is an important point, because a common basis for assessing the actual level of debt is essential in the context of increasing convergence within the framework of European economic and monetary union.
Allow me, in these last twenty seconds, to make two final remarks. By and large, the revised Stability and Growth Pact worked well in 2006. It remains a rule-based framework. Since it was revised, all deficits equivalent to more than 3% of GDP have been regarded as excessive. Nevertheless, the slow pace at which the level of public debt is being reduced in all Member States is a source of concern.
In the short term, then, the Stability and Growth Pact has worked. Whether it will work in the long term remains to be seen. The real test of its resilience will come in the next few years. We expect the Member States to do whatever it takes to make the Pact succeed.
Joe Borg
Mr President, the Commission warmly welcomes Mr Lauk's report and is grateful for the high-quality work of Parliament's Committee on Economic and Monetary Affairs. With a strong economic recovery currently under way in Europe and in the euro area, Member States have an outstanding opportunity to improve their public finances and to prepare for future challenges, such as the ageing population. In this context, Mr Lauk's report is a very timely one.
The Commission clearly agrees with the report's statement that the revised Stability and Growth Pact is so far working as it should. In particular, many Member States have made considerable efforts to meet their obligations under the Pact. Since the reform of the Pact, both the corrective and preventative arms have been fully applied in accordance with the reform's provisions. In addition, it is clear that there has been no leniency in the enforcement of the reformed Pact.
Last year, a significant improvement in the general government deficit in the euro area, and in the individual Member States, was accomplished. For the euro area, the improvement was 0.9%, in nominal terms, and hence also appears likely to be higher in structural terms than the 0.3% expected by the Commission last autumn.
The overall economic prospects for 2007 are equally encouraging. The ongoing presence of cyclically favourable conditions in the euro area calls for further fiscal consolidation efforts in 2007 and beyond. Adjustment towards the medium-term budgetary objectives should be stepped up and pro-cyclical budgetary policies ought to be avoided.
Euro-area Finance Ministers confirmed last week their commitment to make full use of current economic growth and better-than-expected tax revenues to pursue sound fiscal policies, as well as to use unexpected extra revenues for deficit and debt reduction.
The Commission also shares Parliament's concerns regarding the long-term sustainability of public finances and is putting increased emphasis on its assessment. In this respect, a new report on the long-term sustainability of public finances in the European Union was issued by the Commission in October 2006. That report is based on EU common ageing-related expenditure projections. It confirms the importance of addressing the sustainability challenge with a combination of fiscal consolidation and structural reforms.
The Commission has continued its work on incorporating sustainability considerations in setting the medium-term budgetary objectives. Indeed, the improvement of fiscal balances in the medium term contributes to meeting the long-term sustainability implications.
Another key development is the emphasis on improving the quality of public spending, in line with the Lisbon Strategy. That policy guideline is indeed part of the integrated guidelines adopted by the European Council in March this year. The Commission is also grateful for the report's recognition of the efforts made to improve statistical governance. The Commission recently reported to Parliament and to the Council on the quality of the data submitted by Member States.
Finally, while the corrective arm of the Stability and Growth Pact has delivered the expected results, the picture is more mixed regarding the preventative arm. National fiscal rules and institutions can play an important role in this respect. Progress was made last year in this field, and the Commission is currently working on further improving the effectiveness of the Pact's preventative arm. In this context, I fully appreciate Parliament's support for this approach.
José Manuel García-Margallo y Marfil
on behalf of the PPE-DE Group. - (ES) Mr President, Commissioner, Mr Schwab's defence of Mr Lauk's report was so brilliant and so accurate that I am going to continue broadly in the same vein as him.
I share Mr Schwab's concern with regard to the progress of public debt. We grew much more last year than in previous years, we have come closer to our growth potential, but public debt remains below the limits that we ourselves set in the Treaty of Maastricht.
According to all of the indicators, we will have good growth next year, but we will grow less than last year, and that means that public debt will continue to cause concern.
I would once again agree with the rapporteur and the Commissioner in saying that this concern is all the more urgent if we take account of the projections on the development of the population, what is known as the ageing of the population, which may be one of the great challenges of the century we have just begun.
Life expectancy is increasing, birth rates are still extremely low, and that means that the working-age population will be smaller and that, therefore, sooner or later, the labour market will contract and, as a result, we will have far more beneficiaries of the system and far fewer people contributing to the social security coffers.
Neither I nor Mr Schwab, who is a Christian Democrat like me, believe that the viability of the social protection system can be called into question. We need to seek foundations to strengthen it, which make it possible for us to fulfil our social obligations.
There are certain recommendations in Mr Lauk's report that I would like to stress, and I shall add a few of my own.
I agree that we should establish comparable bases for the budgets so that we can make comparisons homogeneous, but I would like us to borrow an accounting technique from the private sector, a form of budget forecasting, in order to take account of the obligations of which we are aware.
It seems to me to be obvious that we should take advantage of good times to reduce public debt further, but we are not doing so, or we are not doing so sufficiently.
Thirdly, I believe that we must rethink our entire system of public spending and revenue in order to make our economies more productive, so that we have more resources, amongst other things in order to meet social welfare spending needs. I believe that we should stop looking at the retirement age as something that represents an obligation and think in terms of a right that opens up the possibility of retiring and orient public finances, since we are talking about public finances, in a way that encourages people to remain in work for longer.
Finally, I believe that we should consider replacing social security contributions, as a fundamental core - practically the only one - of social protection systems, with a system of taxes, essentially value-added tax, which the presidential candidate Sarkozy has brilliantly described as 'social VAT' in the debate that is taking place in that country.
I would like once again to congratulate the rapporteur, who is not here today, the person representing him and the Commissioner on having taken up the majority of our positions.
Dariusz Rosati
on behalf of the PSE Group. - (PL) Mr President, healthy public finances are the mainstay of sustainable economic development. I am pleased to see that in the past year there has been a significant improvement in the European Union in this regard. However, the current positive economic situation is an opportunity to reduce debts and deficits even further. That is why in this year's report by Mr Lauk, the European Parliament encourages Member States to make use of the favourable market situation to adjust their public finances as necessary and to speed up structural reforms such as labour market and service sector reforms, or reducing red tape for business.
I congratulate Mr Lauk on his excellent report and also thank him for his cooperation. There are four matters to which I would like to draw your attention.
Firstly, in point 26, this year's report encourages the European Commission to explore the advantages of establishing independent national bodies in charge of determining the annual level of deficit consistently with the medium-term objective of a balanced budget. However, through the intercession of Mr Borg, I appeal to Commissioner Alumnia to investigate whether fiscal policy councils, independent of political pressure, would be an effective instrument in fighting for a lower deficit. This relates in particular to the better use of periods of economic boom to improve the situation in public finances. I believe that on this matter I agree with my colleagues who have just taken the floor. As numerous studies have shown, governments have a tendency to excessive deficits, and only implement reforms when there is a crisis.
Secondly, I should like to point out that we cannot agree with point 20, rendering a new public debt as unconstitutional. Every government has the right to act within the framework set out by the Maastricht Treaty, which allows a public debt level of up to sixty percent. Obviously any debt which exceeds this level can be deemed unconstitutional, which is why I would support the amendment put forward by the ALDE Group, to define the limit in this way.
Thirdly, the report stresses that the revised Stability and Growth Pact is a key instrument for maintaining budgetary discipline in the Member States. I agree with the rapporteur that reforming the pact increased both its flexibility and its effectiveness. For this reason we appeal to the Commission to exercise close control of the way Member States observe the Pact.
Fourthly and finally, this House recommends a study on the feasibility of introducing a uniform budgetary procedure for all Member States. Such a procedure would incorporate both a uniform calendar for budgetary procedures and uniform assumptions regarding basic macroeconomic parameters, to be assessed in a standard way across the European Union. In my view these changes would not only make it possible to strengthen budgetary discipline in the Member States, but would also improve the coordination of fiscal policy at EU level.
Wojciech Roszkowski
on behalf of the UEN Group. - (PL) Mr President, Mr Lauk's report is an accurate description of the current situation, and is undoubtedly a lesson for the countries that have not yet joined the EMU. Mr Lauk rightly underlined the main threats to the European Union, which are persistently high budget deficits and uncontrolled growth in budgetary expenditure because of the ageing populations in the EU. It also says that increasing growth rates will make it possible to avoid disaster. However, the report fails to answer the fundamental question of how this growth is to be achieved when the economies of the Member States are less competitive than world leaders, and there is no active policy to encourage families in any EU country. Mr Lauk's report clearly shows that the EMU, which is in effect a private members' club for the EU, lacks any prescription as to how the impending threat could be avoided. I have given two examples of how to avoid the main challenge facing the EU countries. In EU debates, for example, delocalisation is not regarded as an opportunity, but a threat to jobs in countries where production costs are higher than in countries where they are lower. These debates very frequently mention the 'demographic challenges', as if nobody realises that they are the result of a dramatic fall in the birth rate. A great deal is said about avoiding pregnancy, the right to abortion, and numerous debates have been held on homophobia - today we have just had the third such debate in two years. But what I would like to know is where is the debate on an active policy of encouraging childbirth in the EU? Only by increasing the birth rate can we avoid the deterioration of the mysterious 'demographic challenge'. The representatives of the Member States may debate on the maturity or otherwise of other countries, but for the countries that have adopted the euro, this is undoubtedly an important lesson.
Sahra Wagenknecht
on behalf of the GUE/NGL Group. - (DE) Mr President, ladies and gentlemen, in our opinion, this report takes us in quite the wrong direction. It squanders the opportunity to support an urgently essential change of course. It levels not a word of criticism at the policy of the European Central Bank, which is geared exclusively to price stability and thereby curbs and strangles the growth potential of the EU. The report merely recommends to the authors of the Member States' budgetary policies that they make spending cuts in order to lower their deficits. Not a word does it say about the ruinous tax competition in the European Union that has been further fuelled by more cuts in business taxes. In Germany we are currently experiencing another round in these dumping stakes.
It is perfectly obvious that public finances in the Member States would be far healthier if people of wealth and property, and above all the multinational corporations with their huge profits, were finally required to pay their fair share instead of receiving more and more tax breaks.
There is no shortage, on the other hand, of proposals in the report for a neo-liberal approach to regulatory policy. For example, it calls for a restructuring of public expenditure with the aid of new public-private partnerships, even in the education sector. Come hell or high water, another key area of our services of public interest is to be sacrificed to the profit motive.
The report calls on Member States to declare new public debt unconstitutional or unlawful by 2015; this, too, is downright foolhardy. If such a ban were enforced, it would strangle any attempt to pursue a budgetary policy.
This report represents a wasted opportunity to support a European policy for development based on social justice and solidarity. For this reason, my group will be voting against it.
John Whittaker
on behalf of the IND/DEM Group. - Mr President, the rapporteur accepts that government finances in several euro zone countries are still not in good shape. Sovereign debts in Italy and Greece have not fallen significantly, and although deficits have been falling, this is a result of some higher economic growth helped by global recovery. It is not evidence that the Stability Pact is working.
However, this week's news from Spain has shown that weak government finances are not the only threat to the functioning of the euro. Spain has an awful trade deficit of 9.5% of GDP, and its construction asset price boom, which has driven domestic demand, is now definitely over. The boom was driven by euro interest rates which had been far too low but are now too high. Spain can now look forward to serious economic difficulties, with rising unemployment and deteriorating government finances. The normal solution to this dilemma would be for Spain to lower its interest rates and devalue, but neither of these options is available as it shares the single currency.
There are therefore three possible outcomes. The first: to forestall a crisis, the European Central Bank reduces the euro interest rate. Germany would not like this, as it would lead to rising inflation; it would also mean the European Central Bank losing its hard-won reputation for holding down inflation expectations.
The second possible outcome is that Spain leaves the euro zone and re-establishes its own currency, enabling it to devalue and have suitably low interest rates. Yes, we have come to the point when this may no longer be unthinkable. It would lead to serious problems of private and public sector debt default that would spill over across the whole euro zone.
Other countries would not want this, which makes the third possible outcome maybe the most likely, and that is large-scale bailout by other countries, despite Maastricht rules against this, and this would be accompanied by centralisation of control over Spanish public finances.
I do not know which of these outcomes will take place, but it is time we faced up to the circumstances: Spain is a large country and the European Union would not find it easy to stand idle while it suffers in recession.
Zsolt László Becsey
(HU) I would like personally to congratulate Mr Lauk for the excellent report, which takes a clear position regarding the lack of sustainability in public finances within the euro zone. For my part, I consider it important to have similar analyses not only of deficits in public finances but also, for instance, of the performance of Member States as regards compliance with the criteria on inflation. Moreover, there is room here, too, for implementing an excessive procedure.
I would like to stress five points. First: it is impossible to analyse the annual and cumulative deficits in static fashion, independently of economic growth, since the most important task of the new Member States striving to join the euro zone is to catch up to the others. Stimulating this is the aim of the Structural and Cohesion Funds, and as a result, higher growth can temporarily be accompanied by an annual deficit in excess of 3%. Examples of this are the 2005 performance of the Czech Republic and the 2006 performance of Slovakia. If the cumulative debt can be reduced, this may be considered the sign of a healthy trend.
Second: we must be especially careful that individual Member States do not attempt to conceal one-off privatised or PPP constructions and count these in the reduction of the deficit. This practice and its danger have been clearly outlined by the rapporteur. For those Member States that do so encourage undertakings with economically dubious results and reduce transparency. With regard to this matter, the instruments available to the European Commission for detecting such tricks must be strengthened. Let us see how each Member really stands; assessment considerations should only come into the picture in the event of excessive deficit procedures. This is important not only for the stability of the euro zone, but also because deficits that are identified only afterwards, or that have been covered up, reduce the credibility of EU institutions in the Member State concerned. This is what happened most recently in Hungary, where, with the Commission looking on, a Member State that had been performing well ended up on the brink of national bankruptcy. This question - the political role of the Commission - should be the subject of a separate debate.
Third: in my view, the fact that the criteria for entering the euro zone are higher than those that apply to the behaviour of its existing members is a political double standard, and therefore must be changed. This practice has never been sanctioned, yet refusing a country entry into the euro zone is itself clearly a sanction. One could point to the French, German or Italian performance by way of an example, for in fact not a hair on anyone's head was harmed as a result, nor did even a single euro have to be paid by way of a deposit.
Fourth: from the perspective of the stability of the euro zone, I am in favour of building into national legislation a ban on further indebtedness. Although every Member State has to resolve this problem for itself, and the situation of each is different, a minimum requirement of those in the euro area ought to be a positive primary balance.
Fifth: the main goal is to achieve the Lisbon Strategy and to improve fiscal policy, for instance with an appropriate response to the challenges presented by our aging population. In this regard, the most important indicator is the rate of employment, which is more revealing, and gives a better measure of the sustainability of public finances, than the unemployment rate. Therefore we should ask for this figure more frequently from the Member States that are at risk. In addition, reducing the tax burden is also an important objective, since a good number of Member States boasts a redistribution rate in excess of 50%, while their traditions do not suggest the Scandinavian model.
Pervenche Berès
(FR) Mr President, Commissioner, I should like simply to say to the previous speaker that this report clearly does not relate to the issue of enlargement of the euro zone but indeed to the state of public finances within the European Union.
As such, I should like to warn this House against a temptation introduced by the rapporteur and unfortunately validated by our committee, which is to totally throw out of kilter the reform of the Stability and Growth Pact in the form in which it has been carried out, for the report proposes nothing less than for us to regard the public deficit as unconstitutional. I hope that this House will have the wisdom to censure or put right this assessment, which I feel is completely at odds with the optimal use of public finances, which must obviously contribute to financial stability and make it possible for future generations not to have to fund our debt. However, I also feel that, if we want to be consistent with our strategy - which requires long-term investment - the idea of regarding any public deficit as unconstitutional is a narrow-minded way of thinking, to say the least.
I should also like to emphasise that the contribution of this report to the greater coordination of economic policies and the dynamic vision of Mr Juncker and of Commissioner Almunia will enable us to progress slowly - too slowly, but safely, I hope - on the path to coordinating budgetary timetables and to taking better account of consistent macroeconomic data for the euro zone as a whole. I have great hopes that what has just taken place at the Eurogroup, namely a dynamic discussion before each Member State launches into the definition of its own budgetary strategies, will become the rule, at the very least within the euro zone.
Allow me, on behalf of the Committee on Economic and Monetary Affairs, to state that, if this were to become the rule, it would obviously be important for the parliamentary dimension of such an anticipation of national budgetary strategies to be strengthened, and that would depend on constructive cooperation being established or enhanced between the European Parliament and the national parliaments.
Dariusz Maciej Grabowski
(PL) Mr President, the rapporteur deserves our thanks for raising such an important issue and drawing attention to the challenge Member States face in the form of their ageing populations. These words of thanks go to the rapporteur for his diagnosis and his prognosis for the disease.
However, what does arouse total opposition is the suggested cure, which is to restrict the budget deficits of the Member States, and to standardise their financial policies. It is paradoxical that the cure is suggested by a Member representing Germany, a country that has not kept within the budget deficit limits, and which is increasing taxation, such as VAT.
The rapporteur's proposed cure arouses disagreement on many points. Because of the time restrictions, I will only mention the two I regard as being the most important. Firstly, only an active strategy of supporting business, reducing red tape and a radical increase in infrastructure investments, abandoning the costly policy of farming subsidies and re-allocating the money to research and development and regional development can solve the dilemma of funding pensions.
Secondly, a uniform budget and tax policy is an attempt to strait-jacket the finances of the new Member States, ignoring their specific development needs, and thereby preventing them from eliminating any development gaps.
We therefore disagree with the rapporteur's findings and take the opposite position. The European Union needs greater freedom of budgetary and fiscal policy for its members, and only this would make it possible to eliminate the dilemma of a poor society.
Othmar Karas
(DE) Mr President, Commissioner, ladies and gentlemen, the report and the debate show clearly that the Stability and Growth Pact has been a success. It is a success because this type of public debate about government finances would never have been conducted in either the Member States or the European framework if there were no Stability and Growth Pact. It is a success because it creates clarity and certainty and defines the same objectives for everyone. It is a success because it establishes a regulatory structure for national budgetary policies. The Stability and Growth Pact is the European political complement to the single currency, and the single currency is our most important and successful response to globalisation.
The success of the Stability and Growth Pact is also reflected in the percentage decrease in total indebtedness and in the annual amount of new debt. We are still far from the finishing line, however, and we now have an opportunity to speed up the process. The economic climate provides a tailwind that can help us to remove structural defects, to step up the liberalisation drive and to rise boldly to the challenges posed by demographic trends. Incurring debt to service debt rather than to invest in the future saddles the young people of our nations with a heavy burden. Incurring debt to service debt means selling our future down the river. We need the annual surplus to reduce the government deficit in every Member State and to increase our scope for future action. May the report give us fresh impetus for the pursuit of these goals.
Donata Gottardi
(IT) Mr President, ladies and gentlemen, having sustainable public finances in the countries of the Union is of vital importance not as an aim in itself, but as a means to implement the European social model, which is characterised by research, investment, innovation and competitiveness, social cohesion, and environmental and energy sustainability.
The new, revised Stability and Growth Pact should not be seen as the only instrument for coordinating economic policies in the European Union, but it must be used in conjunction with the integrated growth and employment guidelines and with the goal of political and economic coordination of the euro zone.
The more the text we approve results in uniform procedures, common shared parameters and a joint debate on budget projections, the more significant it will be. That does not mean, however, that we want a purely accountancy-based approach. Ensuring that the deficit and public debt are reduced will require the implementation of strict measures, but proactive measures aiming at sustainable economic and social development are also needed.
I too should like to point out the fact that calling for the Member States to declare an excessive deficit as being nationally unconstitutional is highly debatable, not least from the legal standpoint of the formulation of relations of subsidiarity between the Union and the Member States.
To conclude, I think it is important to emphasise what role we want to play, that is to say, to lay the foundations for a sustainable European public finance system aimed at growth.
Zbigniew Krzysztof Kuźmiuk
(PL) Mr President, in my contribution to the debate on the report on public finances in the EMU countries for 2006, I would like to make a few observations.
Firstly, while it is true that the public finances of the majority of EU countries improved significantly in 2006, I have serious doubts as to whether this is a result of the reform of the Stability and Development Pact as the Commission makes out. In my view it is more likely the result of a good economic climate.
Secondly, despite these improvements I do not regard the public finance situation in individual Member States as satisfactory. In spite of the good economic climate, only three of the countries in the euro zone returned budget surpluses. Over half of the countries in the zone have a public deficit in excess of 60% of GDP.
Thirdly, I should point out that the state of public finances in the new Member States is better than in the old members, for example, the average public debt in the euro zone was over 63% in the old fifteen, while it does not exceed the 60% threshold in the new twelve.
And fourthly, I would like to state that despite the revision of the Pact, the Commission's favouritism towards the largest Member States has not changed. It continues to tolerate significant deficits, and even public debt among these countries, which contrasts with its strict attitude to the smaller Member States, and in particular the newly accepted members.
Joe Borg
Mr President, on behalf of Commissioner Almunia, I would like to thank you for this very constructive debate. He sends his apologies for not being here today owing to other unavoidable work engagements.
As mentioned by Members, the strong economic recovery currently under way in Europe and in the euro area presents Member States with an opportunity to improve public finances to prepare for future challenges such as the ageing population. As a result of this, the Commission published its report on the long-term sustainability of public finances in October 2006 and emphasises the importance of addressing the sustainability challenge in the context of ageing-related expenditure.
The Commission considers the idea of setting a uniform calendar for budgetary procedures across the EU an interesting one. We need, however, to be prudent, since it would need the support of the Member States. Furthermore, its practical implementation would be somewhat complicated. Having said that, last Friday the Ecofin informal meeting dealt with the medium-term review of stability objectives ahead of the Member States' preparation of national budgets. This is an important step towards a more consistent and coordinated way of establishing national budgets.
President
Thank you very much, Commissioner.
The debate is closed.
The vote on this item will take place tomorrow, at 12 noon.
Written statements (Rule 142)
Gábor Harangozó
in writing. - The worsening budget deficit in some of the new Member States calls for determined and sustained action to implement, through adjusted convergence programmes, a viable fiscal consolidation strategy. Nevertheless, arbitrariness in the implementation of the Stability and Growth Pact is likely to reduce incentives for fiscal adjustment in these Member States. This report on Public Finances in EMU 2006 is therefore an opportunity to raise concerns about too rigid an approach when it comes to deal with the management of excessive public deficits. To avoid the regular infringements by Member States facing difficulties in balancing their public finances, the SGP should remain an incentive to induce fiscal adjustment in EU members and thus the revision should avoid the emergence of an increased arbitrariness in the implementation of the SGP.
Of course, fiscal discipline is a key element in the convergence of the income levels of new Member States with the EU-15. However, increased implementation transparency avoiding rigid and arbitrary procedures, as well as better comparability and reliability of data are necessary not only to facilitate new Member States' entry into the single currency, but also for the prospect of genuinely enhancing growth and competitiveness in these countries.