WRITTEN QUESTION No. 1341/98 by José GARCÍA-MARGALLO Y MARFIL to the Commission. The euro and 1999
Date: 1998-04-29
Institutions: European Parliament, Provisional data
Subjects: budget deficit, economic convergence, gold standard, loan, money-market liquidity, privatisation, public administration, public debt, redemption, third stage of EMU

22.2.1999

EN

Official Journal of the European Communities

C 50/27

deficit situation and thus to meet the convergence criteria on the budgetary position. Moreover, paragraphs 9 and
11 of Article 104c of the EC Treaty, which deal with sanctions, did not apply during stage two of EMU.

(1) OJ C 236, 2.8.1997.
(2) OJ L 209, 2.8.1997.

(1999/C 50/035)

WRITTEN QUESTION E-1341/98

by JosØ Garc(cid:237)a-Margallo y Marfil (PPE) to the Commission

(29 April 1998)

Subject: The euro and 1999

On page 110 of the Commission(cid:146)s report of 25 March 1998 (state of convergence and recommendations for the
transition to the third stage of EMU), it is stated: (cid:145)Whereas in earlier years these factors [relating to debt]
contributed to increasing the government debt ratio in most Member States, governments in recent years have
taken measures to limit their level of government debt via a more careful management of their financial assets(cid:146).

Can the Commission explain what type of measures it is referring to?

Answer given by Mr de Silguy on behalf of the Commission

(4 June 1998)

The government is traditionally engaged in financial operations, including those which are carried out for
economic policy reasons. Such transactions cover, for example, the extension of loans and advances or
investment in shares and equities. The government also owns liquid assets for budget management reasons.

These financial transactions influence the government(cid:146)s indebtedness. To acquire the means necessary to extend
loans or to take participations, the government may issue debt. In addition, the government sometimes borrows
more than needed to cover its budget deficit and then uses these proceeds to accumulate liquid reserves.

Inversely, the government can also use the proceeds of the repayment of loans or of the sale of its shares to pay
back some of its debt. Receipts from the privatisation of public enterprises may be used to redeem outstanding
government debt or to finance the acquisition of other financial assets.

The government debt retained in the Treaty on European Union is a gross definition which only takes into
account government liabilities. Thus, sales of government financial assets have the effect of correspondingly
reducing gross government debt.

In order to limit their government debt, Member States over recent years have given more attention to a careful
management of their financial assets.

Measures taken in this respect have included:

› lower disbursement of government loans and higher reimbursement of outstanding loans (e.g. a repayment
by the social housing sector of outstanding loans amounting to almost 8 % of the gross domestic product
(GDP) in total took place in the Netherlands over the period 1993-1995);

› implementation of large privatisation programmes (e.g. receipts from the privatisation of public enterprises
in the telecommunications and electricity sector in Portugal in 1997 were used to redeem government debt
for an amount of almost 4 % of GDP in the same year);

› sales of gold reserves and allocation of the proceeds to the reduction of government debt (e.g. the Belgian
government in 1996 used the proceeds of gold sales by the central bank, amounting to more than 2 % of GDP,
to redeem part of its debt);

› reduction of the government liquid working balances (e.g. important reductions in outstanding liquidities

took place in Spain in 1994 for an amount of 2,0 % of GDP).