Europe’s Monetary Affairs Commissioner Joaquin Almunia says the EU executive is proposing the excessive deficit procedure concerning Germany be stepped up. This follows the announcement, last week, of a deficit of 3.3% of GDP in 2005 — expected to stay too high also this year.
“Germany has to ensure that its budget deficit drops below 3%, at the latest, at the end of 2007 and that this deficit reduction is done in a sustainable way. The decision to step up the procedure on Germany is important because it shows that nobody, not even the biggest economy in the European Union, is exempted from the rules of the pact.”
If the proposal is backed by the finance ministers, excesses can be punishable by fines.
Almunia also urged stronger efforts from Warsaw, since Poland is among the member states subject to the excessive deficit procedure, saying it needed to improve the long-term sustainability of public finances and spending controls.
The Stability Pact was designed to underpin the euro.
Meanwhile, on another convergence front, Slovenia’s law on double pricing in both Tolars and in euros has come into force. Slovenia wants to avoid inflation pressure and possible price increases ahead if its goal of adopting the euro as the country’s official currency in June next year.