MNI BRIEF: EU Agrees Broad Outline Of Fiscal Reform

European Union finance ministers and officials have agreed a broad outline of a reformed fiscal surveillance regime, but said key aspects remain to be agreed.

According to a draft text of the conclusions of the next EU summit on March 23-24, the leaders are ready to invite the European Commission to submit a legislative proposal for fiscal reform, “taking into account Member States’ converging views and areas identified for additional discussions.” (See MNI: EU Agrees Compromise Way Forward On Fiscal Rules Reform)

Commission Executive Vice President Valdis Dombrovskis noted that there was “still work to be done on the details” at a press conference today and conceded that completing the reform this year would present an “ambitious timeline”.

An EU official told MNI that the proposal from the Commission was now likely to be presented “sometime in April”.

The text of the conclusions highlights key points from the Commission’s orientations paper of last November 2022, on the central role of fiscal-structural plans, the use of reference paths for debt reduction, the possibility of country-specific escape clauses and the need for greater flexibility.

It also calls for consideration of key demands from Germany and other “frugal” states, such as the need for a minimum fiscal effort as well as for stronger enforcement of the rules if a new flexibility is abused.