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MNI BRIEF: EU Debt Rules Need Strengthening - DNB's Knot

(MNI) LONDON

Europe's Stability and Growth Pact should be reformed to give it more built-in room for countercyclical fiscal policy, the head of the Dutch central bank said in a speech Friday, with the European Commission set to relaunch its review of the bloc's fiscal rules after Germany's general election on September 26.

"A more countercyclical fiscal framework should therefore have robust and credible rules that ensure national governments keep their debt levels in check," Klaas Knot said. "Not only should member states build up buffers in good times. They should also increase potential economic growth that ultimately bolsters debt repayment capacity. So, as we allow for more fiscal flexibility, limiting the level of debt will have to play a bigger role as an anchor for fiscal prudence.

MNI London Bureau | +44 20 3983 7894 | luke.heighton@marketnews.com
MNI London Bureau | +44 20 3983 7894 | luke.heighton@marketnews.com

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