New community rules on deficits and public debt will come into force in the European Union (EU) on Tuesday, reflecting a reform of the bloc’s fiscal rules that member states will begin implementing in 2025 after developing national plans.
Entry into force will occur on the day when the legislative package, approved by the European Parliament last week and this Monday by Council member states, is published in the Official Journal of the EU.
Exactly until this Tuesday, EU countries (including Portugal) were supposed to send simplified versions of their stability programs to Brussels, but as new European fiscal rules come into force, this deadline no longer exists and countries will have more time, until September. submit the national plan to the European Commission.
It is now planned that member states will present their multi-year plans covering four or seven years to Brussels in the summer, which will then be discussed with the community leader so that the rules are fully applied in 2025.
In an interview with Lusa published last February, European Economic Commissioner Paolo Gentiloni said he expected the EU’s new fiscal rules to come into full force in 2025, given member states’ agreement, meaning “the period between Summer and This autumn will be very hot as negotiations on multi-year plans will take place between Member States and the Commission.”
These will be new national fiscal and structural plans (they will no longer be called national reform and stability programs) and will include measures to correct macroeconomic imbalances and guidance on priority reforms and investments for four to seven years.
EU fiscal rules were suspended following the Covid-19 pandemic and the war in Ukraine to allow member states to deal with crises, and then consensus was reached that economic governance legislation needed to be reviewed and updated before the Stability and Growth Pact was signed. was revived, originally created in the late 1990s and considered already “outdated”.
Fiscal rules are now scheduled to be reinstated after being suspended due to Covid-19 and the war, but with new wording despite the usual ceilings of 60% of gross domestic product (GDP) for public debt and 3% of GDP for public debt. deficit.
A reduction in public debt of at least one percentage point per year is specified for countries with a debt ratio above 90% of GDP (as in Portugal) and by half a percentage point for countries between this ceiling and the 60% level. GDP.
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 ).
To maximize distraction, an annual cap on government spending will be introduced.
Countries that do not comply may face excessive deficit procedures and penalties.
Author: Lusa
Source: CM Jornal
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