Talks on how long EU fiscal rules should remain suspended yet to follow - Dombrovskis

  • 2020-04-03
  • LETA/TBT Staff

RIGA - Talks on the length of the time period for which the European Union's fiscal rules remain suspended are yet to follow, he European Commission's Vice President Valdis Dombrovskis said in an interview with LETA. 

"We have not yet set a specific term. It definitely applies to 2020, because it is clear that member states' budget deficits and debt levels will be much higher than previously forecast. Discussions about 2021 are yet to follow during the European spring semester, which usually is late May, early June. This is when discussions will take place on what the  fiscal policy might be in 2021 and following years," Dombrovskis said. 

The EU commissioner said that hopefully,  there will be more clarity by late May or early June on how the coronavirus pandemic is going to unfold, whether it can be stopped, and depending on this it will be possible draw conclusions about the fiscal policy. 

Commenting on what member states' budgets might look like after the fiscal rules are reintroduced, Dombrovskis said that deficits and governments debts will have grown larger. 

"There is no doubt about it. But the question is whether there are any other options in this situation, because this is not only a public health problem but also a huge shock to the economy. If we want to ensure a fast economic recovery after this shock, it is necessary to preserve as many businesses and jobs as possible. This requires additional funding, just like the healthcare system is requiring additional funding now," Dombrovskis said. 

Stressing that member states should take into consideration the sustainability of their government debts, Dombrovskis said that for Latvia this problem might be less pressing because Latvia's government debt is well below the Maastricht criterion, which is 60 percent of GDP. 

On March 23, EU finance ministers agreed to suspend the bloc's strict fiscal rules to enable member states to increase their expenditure while they are battling the Covid-19 pandemic.