EU Budget Rules to Return After Crisis: Dombrovskis
(Bloomberg) -- Budget restrictions for European Union member states will apply again after the coronavirus-driven recession is over, European Commission Executive Vice President Valdis Dombrovskis said in an interview with Corriere della Sera.
The EU’s stability pact -- rules to ensure members pursue sound public finances and coordinate fiscal policy -- remains active, Dombrovskis said in the interview published Saturday, specifying that the bloc’s general escape clause has been activated.
Governments going further into deficit during the crisis need to be mindful of the sustainability of such budget policies, Dombrovskis warned, noting that Italy’s pre-existing deficit left the country with little room to maneuver once the crisis hit.
The EU is examining ways to improve anti-cyclical policies, to allow governments to gain cushioning from lower deficits during positive phases of the cycle, he said.
Speaking on disagreements in countries including Italy over recourse to the European Stability Mechanism, Dombrovskis said the funding comes without conditions other than applying it directly or indirectly toward health-related costs.
On European plans for a recovery fund, Dombrovskis said he agrees with Germany that discussions over the program’s balance between loans and grants need to be resolved quickly.
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