Di­js­sel­bloem: fo­cus on bud­get dis­ci­pline

Financial Mirror (Cyprus) - - FRONT PAGE -

Eurogroup Pres­i­dent Jeroen Di­js­sel­bloem on Tues­day joined crit­ics of the Euro­pean Com­mis­sion’s re­cent call for fis­cal stim­u­lus at eu­ro­zone level.

Speak­ing be­fore the Euro­pean Par­lia­ment’s com­mit­tee on Eco­nomic and Mone­tary Af­fairs, Di­js­sel­bloem, who is also the Nether­lands’ fi­nance min­is­ter, stressed that the role of the ex­ec­u­tive is to en­force the Sta­bil­ity and Growth Pact, the EU’s rules to con­trol mem­ber state spend­ing.

“Be­tween the rec­om­men­da­tion on fis­cal ex­pan­sion and up­hold­ing the rules on the fis­cal tra­jec­tory that come from the pact, there is some ten­sion,” Di­js­sel­bloem said.

“They can’t both be true. The first re­spon­si­bil­ity of the Com­mis­sion is to up­hold the pact,” he told MEPs

Last Novem­ber, the Euro­pean Com­mis­sion pro­posed a timid fis­cal push for the 19-mem­ber bloc of 0.5% of the GDP (around EUR 50 bil­lion). The pro­posal came against the back­drop of po­lit­i­cal in­sta­bil­ity and so­cial un­rest in Europe.

“There is both a need and a win­dow of op­por­tu­nity to act on the fis­cal front at this pre­cise junc­ture, also to re­bal­ance the over­all pol­icy mix of the euro area,” the Com­mis­sion wrote in the com­mu­ni­ca­tion.

Eu­ro­zone fi­nance min­is­ters are ex­pected to dis­cuss this topic dur­ing its next meet­ing on 5 De­cem­ber.

The Dutch min­is­ter’s crit­i­cism is in line with

the com­ments made by his Ger­man col­league, Wolf­gang Schäu­ble, who also dis­re­garded the ex­ec­u­tive’s call for more spend­ing.

The Ger­man min­is­ter warned that the ex­ec­u­tive is act­ing “po­lit­i­cally” and “be­yond its man­date”.

Ber­lin is one of the only coun­tries that could in­crease its spend­ing on the Euro­pean econ­omy. But Schäu­ble pointed out that Germany led in­vest­ment in the eu­ro­zone over the last decade.

As part of the strat­egy to re­vive the Euro­pean econ­omy, the ex­ec­u­tive is also push­ing to ex­tend the fire­power and the dead­line of the Euro­pean Fund for Strate­gic In­vest­ments (EFSI), known as the Juncker Plan.

The Euro­pean Com­mis­sion’s goal is to mo­bilise at least 500 bil­lion in in­vest­ment by 2020, mostly by us­ing pri­vate funds. It urged EU fi­nance min­is­ters (Ecofin Coun­cil) to make a de­ci­sion about the ex­ten­sion on 6 De­cem­ber.

The Com­mis­sion be­lieves that the flaws spot­ted by in­de­pen­dent eval­u­a­tions fol­low­ing the first year of the Juncker Plan were ad­dressed in the re­view pro­posal put for­ward last Septem­ber.

The EU Court of Au­di­tors and EY, a con­sul­tancy firm, ques­tioned the added value of the project and called for bet­ter co­or­di­na­tion be­tween EFSI funds and other EU en­velopes.

Euro­pean Com­mis­sion Vice-Pres­i­dent Jyrki Katainen told Reuters in an in­ter­view the project “crowded in” pri­vate money to Europe. He es­ti­mated that the ini­tial EUR 315 bil­lion, three-year EFSI pro­gramme could cre­ate some 1.2 mil­lion jobs.

Ac­cord­ing to his es­ti­mates, EFSI has mo­bilised an est­mated EUR 154 bil­lion in to­tal in­vest­ment and sup­port for al­most 380,000 SMEs.

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