EU COVID-19 Impact Report to be Released on the 19th... Discussion on Fiscal Rules Amendment Begins

[Photo by Reuters-Yonhap News]

[Asia Economy Reporter Park Byung-hee] The European Union (EU) is expected to begin full-scale discussions on changes to the EU fiscal rules, which stipulate that the government budget deficit ratio should be within 3% of GDP and the government debt ratio within 60%.

According to major foreign media on the 5th (local time), the European Commission is scheduled to release a report analyzing the impact of the COVID-19 pandemic on the European economy on the 19th. The media added that the Commission will also disclose the results of an analysis on the correlation between COVID-19 and the EU fiscal rules and plans to start discussions on revising the fiscal rules.

The EU fiscal rules, known as the 'Stability and Growth Pact,' were established with the introduction of the euro. It serves as a kind of safeguard to prevent any eurozone member country from reckless fiscal management that could devalue the euro. The EU fiscal rules are not expected to be enforced until 2023 to allow member governments more flexibility in responding to the COVID-19 crisis.

However, there are already criticisms that the EU fiscal rules have become ineffective. This is because the average debt-to-GDP ratio of eurozone member governments currently reaches 100%, far exceeding the 60% limit.

Many member governments argue that since the fiscal rules were established 20 years ago, they need to be revised to reflect the changed economic realities. There are also claims that special provisions should be included in the fiscal rules to accommodate the large-scale investments necessary to achieve the 2050 carbon neutrality goal.

The European Commission stated that the reason for analyzing the impact of COVID-19 is to find ways to address the increased government debt accumulated during the pandemic. Furthermore, it plans to reapply the fiscal rules in 2023 and aims to prepare new proposals regarding the fiscal rules next year after discussions.

This content was produced with the assistance of AI translation services.