MNI BRIEF: "Broad Areas Of Agreement" In EU Debt Talks

European Commission Executive Vice President Valdis Dombrovskis said on Monday “areas of broad agreement seem to be emerging” in talks on overhauling the bloc’s rules on borrowing and debt, and that he hoped for a constructive approach in talks as new finance ministers took their posts in several countries.

“We need a credible debt reduction pathway, but we also need to be realistic and allow scope for economic recovery and green and digital transition,” he said, as the Eurogroup meeting of finance ministers got underway in Brussels.

The emerging consensus includes a more gradual approach to debt reduction, including dropping the rule calling for excess debt to be reduced by one twentieth a year. There was also agreement on the need to simplify the rules and to move away from “directly unobservable indicators, like output gaps and structural balances,” he said.

Separately, new German Finance Minister Christian Lindner reiterated his view that the EU’s Stability and Growth Pact debt rules had proved their flexibility during the Covid crisis and that now was the time for states to rebuild fiscal buffers. Fiscal consolidation would also be key to unblocking Banking Union talks, he said.

But,new Dutch Finance Minister Sigrid Kaag distanced herself from the so-called Frugal group of countries, saying “We are looking for common ground.”