Final Eurocamera green light for Stability Pact, Italian parties abstain. The intervention of Paolo Gentiloni
The directives for Europe's new economic governance were approved with 359 votes in favour, 166 against and 61 abstentions
by Beda Romano
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FROM OUR CORRESPONDENT
BRUSSELS - MEPs approved today, Tuesday 23 April, the long-standing reform of the Stability and Growth Pact, after two years of heated negotiations among member countries and then between Parliament and Council. The text introduces new margins of flexibility compared to the previous structure. The attempt is to combine fiscal consolidation with new reforms and investments. One wonders, however, whether the reform will meet the EU's huge investment needs.
In today's vote, three in all, the Italian parties abstained, both those in the governing majority and those in opposition. Last December, when the Council approved its negotiating position, Finance Minister Giancarlo Giorgetti gave his approval, calling the new rules 'more realistic' (see Il Sole/24 Ore of 21 December 2023). The Council is expected to give its final go-ahead next Monday.
Debt Reduction Plans
In fact, governments will have to present a medium-term debt reduction plan of four to seven years by 20 September. The trajectory will then be negotiated with Brussels. The benchmark will be public spending, rather than the deficit. However, the ceilings of 3% and 60% of GDP for deficit and debt remain in place. There are minimum consolidation levels to be introduced when a country is in excessive deficit.
The objectives
.In fact, the text stipulates that countries with a debt exceeding 90% of GDP are subject to an average debt reduction of 1% per year. The provision is less restrictive than the current requirement - never applied - according to which each country must reduce its debt above 60% of GDP by 1/20 per year (see Il Sole/24 Ore of 11 February). On a transitional basis between 2025 and 2027, mitigating circumstances, such as the cost of debt servicing, will allow the adjustment burden to be limited.
The safeguard
.At the same time, the text of the new Stability and Growth Pact provides for a controversial safeguard, which is to provide a safety margin below the 3% of GDP deficit reference value of the treaty, in order to create budgetary reserves. The margin will be 1.5 per cent of GDP. The aim is to ensure that in the event of an economic shock a country can have room for manoeuvre on the public spending side without having to exceed the deficit ceiling.
