The 5 December Eurogroup assessed the draft budgetary plans of eurozone countries and issued a statement on their conclusions.
“The economic and budgetary situation in the euro zone as a whole has steadily improved. Growth is forecast in every member state and will continue to strengthen in the coming years. Almost all member states are forecast to respect the treaty reference value of 3%. (of GDP, deficit)”
it was also said that debt has started to come down, although the level of debt remains high, very high in some countries, and sustainability of public finances remains a matter of concern.
The Eurogroup agreed that the fiscal stance should strike a balance between economic support and budget sustainability, in line with the requirements of the Stability and Growth Pact (SGP). and stressed the need to support a fragile recovery.
The eurogroup identified three groups of member states:
- In the first group, Germany, Estonia, Luxembourg, Slovakia and the Netherlands. They have all submitted draft budgetary plans that are compliant with the pact
- In the second group, France, Ireland, Latvia, Malta and Austria have submitted draft budgetary plans that are broadly compliant. These member states will be vigilant in their budget execution in the coming year to ensure compliance.
- In the third group, Eight Member States, Belgium, Italy, Cyprus, Lithuania, Slovenia, Finland, Spain and Portugal have submitted draft budgetary plans that risk non-compliance and need to implement additional measures to ensure that the their budgets will be compliant with the rules of the Stability and Growth Pact.
Italy’s, finance minister Pier Carlo Padoan did not attend the eurogroup meeting after the referendum result and the impending resignation of Matteo Renzi. The Italian government could not commit now to take additional measures. Therefore the Eurogroup invited Italy to take the necessary steps in the near future to ensure that the budget will be compliant with the requirements of the SGP.
The new governments in Spain and Lithuania “will submit updated draft budgetary plans soon”.
Greece is part of the support programme and does not submit a DBP in the same way as the rest of the eurozone countries.
The European Commission will be expected to take all necessary steps to ensure compliance with the SGP.
A number of sanctions including heavy fines for non compliant member states are available to the Commission as part of the SGP.
