Financial and business news from Bulgaria

Johannes Hahn calls for revision of EU debt rules

European Budget Commissioner Johannes Hahn is calling for a reform of the Stability and Growth Pact (AKP) to adopt more flexible rules for indebted countries, DPA reported.
Instead of the strict cap on government debt of 60 percent of gross domestic product (GDP), debt limits should be negotiated with each country individually, Khan told the online edition of the German c. “Welt.”

These limits must be realistic and should be tied to clearly defined deadlines and concrete measures to reduce debt, the Commissioner said.

In his words, in light of the coronavirus pandemic, it is no longer possible to group together all 19 euro area countries, 24 years after the establishment of the Stability and Growth Pact, BTA reports.

The SGP signed in 1997 hardened the rules established by the Maastricht Treaty in 1992.

Greece, whose debt is 205.6 percent of GDP, or Italy at 155.8 per cent, cannot reach the target of 60 percent of GDP in the medium term. According to Johannes Hahn, even sanctions won't help. Furthermore, he points out that countries with large debt need sufficient government investments to lead to more revenue and reduce the debt burden through stronger economic growth.

The Commissioner also points out the need for structural changes and consolidation of expenditure. Johannes Hahn expects consultations to begin to review the Stability Pact in the autumn.


Related news