RIGA - The European Commission, the EU's executive branch, has proposed changes to the Growth and Stability Pact in order to stimulate growth in the 12-nation euro zone, though it was unclear how much support the proposal had among commission members.
While the core aspects of the pact would stay the same 's fiscal deficit and public debt levels 's under the proposed changes, they should provide greater flexibility to countries with large budget deficits, said Economic and Monetary Affairs Commissioner Joaquin Almunia.
"We have to make sure that while enhancing the economic rationale, we also increase predictability, transparency and guarantee equal treatment among member states," he said.
"We are strengthening the pact. We are supporting the goals and the main instruments of the pact," he commented.
Under Almunia's plan, which met resistance from smaller states such as Estonia, countries with a large deficit would be given more time to bring budget finances under control.
EU heavyweights Germany and France have been running budget deficits in an effort to boost their economies and carry out their social programs.
EC Vice President Siim Kallas, however, seemed to downplay the significance of the announcement and denied that Almunia's idea was a concrete proposal.
"It was meant rather as a starter of discussion," he told the Baltic News Service. "The stance of the European Commission in any event is that there must be no backing down on the principles of the stability pact since this would jeopardize sustainable growth of the economy and stability of monetary policy," he said.
Kallas added that the Growth and Stability Pact "in all its strictness" had been written into the European constitutional treaty, which means that the treaty would also have to be changed.
The treaty may be signed this fall.
Commenting on calls sounding to ease the pact, the former Estonian prime minister and finance minister said it was mostly weak governments that were interested in such changes.
"Strong governments wish that firm rules would help them keep finances under control, whereas the weak ones want non-interference and free hands to be free to give promises in their parliaments, for instance," Kallas said.
"And these governments are also glad about all kinds of vague promises," he said.
On the eve of the commission meeting, Baltic finance ministers said they would not support the proposed reform to the pact. Estonian Finance Minister Taavi Veskimagi, who had discussed the issue with his Baltic colleagues, stated that the three countries would oppose any attempts to ease EU requirements to member states' budget policies.
The ministers criticized states that do not observe the pact's requirement to keep balanced budgets. "It has to be ensured that the pact continues supporting a sustainable economy, considering the ageing population," Veskimagi stressed.
"If we are for reviewing the pact at all, then it is only that there must be efficient supervision of the observance of the pact requirements by all," he said.
