The escape clause is abolished from 2024 according to its announcements Commission however, fiscal rules do not return to having the same rigid and horizontal profile for all countries.

For each country there will be new quantitative rules depending of course on the particularities of its debt, which of course should be under the umbrella of the basic rules for a deficit of less than 3% and a debt of up to 60% of GDP.

What seems to be flexibility is the rate of debt reduction in cases where it exceeds 60%, where each country will have to build its own course.

Critical Eurogroup

On March 13-14, the European finance ministers will discuss the changes to the Stability Pact, however, as emphasized by the Commission, the old rules for deficit and debt remain. In other words, there will not be a uniform obligation to reduce the debt by 5% of the excess of the 60% target, but there will be flexibility for each national government to pursue its own policy.

Especially for countries with a large debt, such as Greece, the Commission will insist on a policy that will ensure its reduction. Thus, the old goal of a primary surplus of at least 2% of GDP is coming to the fore again, which was considered to ensure the sustainability of the debt, nevertheless at this level there will be consultations and negotiations as whatever government is in the next period will want to put on a smaller corset for her fiscal policy.

Monitoring government spending

In addition, another new indicator is introduced in the new programs, which is the monitoring of primary government expenditures. Member states would have to lock in a spending ceiling, meaning there would be an agreed path of net spending over a four-year period. In this context, they should submit national plans that will lead to ensuring debt sustainability and strengthening sustainable development. These plans will be different per country, depending on the risks that an economy has to face and the level of its debt. The plans will integrate fiscal, reform and investment objectives, including those to address macroeconomic imbalances where appropriate.

States should also report on their planned energy support measures, including their fiscal impact, their phasing out

Source: moneyreview.gr