The European Commission is reportedly poised to scrap draconian fiscal rules of the past that have been blamed for “suffocating” post-crisis economies, according to a Bloomberg report, despite calls from Germany to restore strict limits aimed at reduction of public expenditure.

“It is clear that we are not going back to the 1/20 rule”which forced member states to implement serious adjustments to their public debt levels, the commissioner said Valdis Dombrovskis on Friday in an interview Friday on the sidelines of the International Monetary Fund’s spring meetings in Washington.

He added that the Commission is in the final phase of formulating common quantitative reference points in order to ensure the equal treatment of member states within the new system.

The Commission is expected to propose, possibly at the end of April, legislative proposals for the reform of the Stability and Growth Pact. As Dombrovskis said, these amendments will give more leeway to the governments of the member states to determine their fiscal course and room for development-oriented investments. The Commission’s proposals, he also said, will contain a common methodology, which will ensure the equal treatment of the member states with clarity regarding the fiscal course that will be recommended for each of them by the European Commission.

Nevertheless, objections from the German side persist. Berlin had raised concerns about the possibility that the Commission would give some governments too much room to balance their budgets through opaque bilateral agreements and pressed for more transparency. In addition, the German finance ministry under Christian Lindner of the FDP wanted member states to reduce public debt by 1% a year in the most alarming cases and by 0.5% if the excess of debt is more moderate.

The Commission criticized some of the German proposals, according to a German government official. Among them was the proposal for the so-called “common guarantee”, i.e. the requirement that over-indebted member states reduce their debt levels by a certain amount per year, a proposal that does not take into account the economic situation of these member states. For Berlin, however, the bar has not been set too high.

The Netherlands (a country that in matters of fiscal policy moves along the lines of Berlin) is in favor of the proposal that each member state decides how to reduce its debt and in favor of giving more space for investment, especially in areas such as the green transition.

On the other hand, the IMF on Friday asked EU member states to pursue more ambitious fiscal consolidation.

The head of the Fund’s European division, Alfred Kammer, said “it would be better now to have more consolidation” to help fight inflation, thus allowing the ECB to be less aggressive with rate hikes and possibly helping to limit of the turmoil in the financial sector.

The IMF supported the Commission’s ideas for a risk-based and differentiated approach to EU fiscal rules because countries’ economic situations differ. However, Kammer stressed that discussions on fiscal rules should end soon.

The Commission started the process in early 2020, before the pandemic, and member states agreed in March to complete all legislative work by the end of 2023.