Medina is expected in Brussels today for the first Eurogroup meeting after the elections

Finance Minister Fernando Medina is expected in Brussels this Monday for a meeting of the Eurogroup, the first council after Sunday’s legislative elections, which will focus on the renewal of European Union (EU) fiscal rules in 2025.

Following Sunday’s legislative elections, Fernando Medina is expected to represent Portugal this Monday at the Eurogroup meeting in the Belgian capital, which will discuss macroeconomic developments and fiscal policy in the eurozone in 2025.

Given the political agreement reached in February between lawmakers to overhaul EU economic governance rules, single currency finance ministers will exchange views on the direction of fiscal policy for 2025, taking into account economic development.

In an interview with Lusa in mid-February, European Economic Commissioner Paolo Gentiloni said he expected the EU’s new fiscal rules to come into force in 2025, given member states’ agreement would mean countries would submit multi-year plans to Brussels next summer.

The stance came after the European Parliament and EU member states days earlier reached an agreement to reform the bloc’s fiscal rules, aimed at ensuring public finances are restored while preserving investment.

We are talking about the planned resumption of these fiscal rules after the suspension due to the Covid-19 pandemic and the war in Ukraine, with new wording, despite the usual ceilings of 60% of GDP for public debt and 3% of GDP for public debt. deficit.

Once an agreement is reached, debt is expected to be reduced by at least one percentage point per year for countries with debt levels above 90% of GDP (as is the case with Portugal) and by half a percentage point for countries between that ceiling and the 60% of GDP level.

Member States will have to prepare their national plans, which will be assessed by the European Commission, identifying a period of at least four years to put the debt on a downward trajectory, which could be seven years in the face of reforms and investments (for example included in recovery and resilience plans ).

Despite this, an annual government spending cap will be introduced to maximize distraction.

Countries that do not comply may face excessive deficit procedures and penalties.

The safeguards were introduced by a group of “lean” countries led by Germany, which has always called for quantitative debt targets, while other member states such as Italy or France have demanded more flexibility for investment and reform.

The talks build on the European Commission’s proposal, published in April 2023, for risk-based fiscal rules with a technical and personalized trajectory for EU debtor countries such as Portugal, giving them more time to reduce deficits and debt.