Slovenia Advocates Minor Changes to Stability and Growth Pact
Slovenia supports a reform of the stability and growth pact. "Certain modifications are necessary, yet they must be minimal," Finance Minister Andrej Bajuk said on the sidelines of a meeting of EU finance ministers on Tuesday, echoing the general agreement that the pact's key elements must stay in place.
Bajuk also noted that it is necessary to pay greater attention to the characteristics of the individual member states. "We cannot all be hostages of the same mathematical formulae," he stressed. "We need a more pragmatic and realistic approach. The pact will lose nothing with that".
According to the finance minister, the mandatory reduction of the structural deficit by 0.5 percent of the GDP per year that countries with excessive deficits must undertake is not necessarily suited for all countries. "It is not the same if a country has a minor public debt while another has a debt exceeding 110 percent of the GDP," he illustrated.
Mid-term objectives, too, should better reflect the situation in the respective member states. "The biggest challenge for Slovenia, for example, is the mid-term demographic risk, as the country has the lowest birth rate in Europe which will have a financial impact in 10 or 15 years," Bajuk underlined.
The minister is optimistic that an agreement on the reform might indeed be finalised in March as announced today by Luxembourg's PM Jean-Claude Junker. However, many issues still remain open, he added.
Bajuk was reluctant to comment on the proposal of German Chancellor Gerhard Schroeder for a comprehensive reform of the EU's mechanism. "I do not have the feeling that the reform will take the direction they want," he said.
The EU finance ministers today agreed to loosen the stability pact without throwing out key mechanisms such as the budget shortfall limit of 3 percent of GDP and penalty procedures.
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