Local view for "http://purl.org/linkedpolitics/eu/plenary/2001-10-03-Speech-3-172"
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"Mr President, ladies and gentlemen, in the interests of the Eurogroup it is important firstly to develop an effective and lasting budgetary policy for the entire area, and also specifically for each of the Member States. This must be done in line with national constraints and special considerations. This budgetary policy must dovetail with the monetary policy of the European Central Bank.
Mr President, Commissioner, ladies and gentlemen, all these issues will doubtless lead to some long but interesting discussions at the next meeting of the euro area.
However, it will not be easy to finalise the details of this type of budgetary policy for several reasons. Firstly, the results of any budgetary policy depend on the time scales established. For example, in the short term, pro-cyclical budgetary policies should not be used. In the medium term, the objectives of the Growth and Stability Pact to establish a balance or surplus of public finances should be maintained. In the long term, it will be essential to ensure the viability of public finances. This should take account of the different elements involved, including the difficult and important problem of the ageing of populations.
Ladies and gentlemen, what I have just said clearly demonstrates the extent of the challenges before us. Do I really have to highlight just how difficulties with planning and methods, and the inevitable economic uncertainty, make it very difficult and complicated to define and implement budgetary policies? We are confronted by statistical problems, the uncertainty surrounding economic forecasts, even in the short term, and the diversity of the many situations. There is also the fact that the effects of budgetary policies are only felt after a certain period of time. All this makes it difficult to determine a budgetary policy
. The long-term analysis of budgetary policy is also an essential part of structural policies. The strategy combines a number of approaches as regards the ageing of our populations. The strategy aims to step up the reduction of public debt. It also promotes the adoption of measures to increase employment levels. This involves the gradual elimination of obstacles to employment, particularly by reducing the fiscal burden on employment. Lastly, the strategy provides for the in-depth reform of pensions systems, in order to ensure their viability.
The Belgian Presidency is seeking to examine public finances in greater depth on an ongoing and long-term basis. Particular attention will be paid to examining public finances in relation to the stability and convergence programme. Member States and the other interested parties agree on the long-term objectives and the instruments to be used. However, as regards the short and medium term, recent economic deterioration has created some confusion. Clearly, we need to hold an in-depth debate on this matter in order to define and establish a strong common position. We must hold such a debate during our presidency.
Ladies and gentlemen, we must keep to the terms of the Growth and Stability Pact. Member States stated this commitment during the informal meeting of ECOFIN at Liège on 21 and 22 September. Therefore, there can be no question of Member States being faced with deficits in excess of the convergence criteria of 3%. The Extraordinary European Council of 21 September also reaffirmed its commitment to the framework, regulations and full implementation of the Growth and Stability Pact.
However, budgetary balances do not necessarily have to be set in stone. Instead of a purely nominal approach, there should be the ability to make adjustments in relation to changes in economic circumstances. The broad guidelines of economic policy for 2001, adopted at Gothenburg last June, are very clear on this point. The principle is accepted without discussion in a favourable economic climate. Hence, better than expected economic growth inevitably leads to a greater improvement in nominal budgetary figures. For this reason also, a pro-cyclical budgetary policy, together with a decrease in spending which could lead to overheating, is not permitted.
The question that now arises is to establish whether this allowance for cyclical variation can be implemented in a similar way in periods of poor growth or recession. The Belgian Presidency is convinced that this is indeed possible. The broad guidelines of economic policy for 2001 confirm our belief.
In a less favourable economic climate, the balances already taken into consideration within the framework of the Pact, should also be adjusted in line with changed economic circumstances. Nominal balances can therefore be affected by worsening economic conditions. However, they can only fluctuate according to those same economic conditions.
In these circumstances, a pro-cyclical policy should not be used. Consequently, a decrease in revenue should not be then compensated for by an equivalent reduction in spending. Cyclical adjustments must be reliable in order to assess the budgetary positions correctly. The agenda of the Belgian Presidency therefore allows some time for us to refine effective methods to calculate the disparity between production and potential growth. These methods should be used in future stability programmes."@en1
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