By Philip Blenkinsop
BRUSSELS (Reuters) - The European Commission proposed on Wednesday rules to control a budget for the euro zone, despite ongoing disputes among its members over the planned budget's size and scope.
Euro zone finance ministers were to have decided on the key details of a budget for the 19 countries sharing the euro, as distinct from the overall European Union budget. But they have been haggling for months over its size, what it should be used for and how it could be financed and managed.
France and several southern European countries want a large budget funded by dedicated taxes and able to stabilise economies hit by an unexpected shock.
The Netherlands and its northern European allies want a small budget funded only from the existing, wider EU budget and used for investment or to support structural reforms.
Under the Commission proposal released on Wednesday, the euro zone members themselves would be able to steer funds towards reforms and investments they consider most important.
"This is the state that we have. Already member states want to have a say, maybe a bigger say, in the approval process. This is a matter of calibration," an EU source said.
The countries' annual guidance would feed into existing recommendations the EU gives specific countries each year.
The euro zone budget would sit within the wider EU budget and form part of an EU-wide reform support programme, which the Commission proposed in May 2018 with a total size of 25 billion euros (£22.31 billion). The euro zone part would be about 17 billion euros, an EU source said.
The overall EU budget for the 2021-2027 period is set to be about 1.1 trillion euros.
Euro zone countries still need to settle key aspects of the euro area budget, such as its size and how it is to be funded.
The budget itself would be due to begin at the start of 2021, the same time as the EU-wide budget. The goal is to conclude negotiations during the Finnish presidency of the bloc, which runs until the end of the year.
Countries in the EU's exchange rate mechanism, currently just Denmark, would also be allowed to participate.
(Reporting by Philip Blenkinsop)
