Debt: EU Commissioner Paolo Gentiloni wants a more flexible stability pact

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EU Commissioner Gentiloni: How do you get a better grip on debt?

Photo: JOHN THYS / AFP

EU Economic and Monetary Affairs Commissioner Paolo Gentiloni wants to regulate debt reduction for each individual member state in the future.

"We can't lump all countries together," the Italian told the Frankfurter Allgemeine Zeitung (FAZ).

Gentiloni therefore wants to present a proposal for a comprehensive reform of the EU Stability Pact around mid-2022.

A »differentiated view« of highly indebted member states should form part of the reform.

It makes sense to set individual goals for each country, said Gentiloni.

He could also imagine giving the member states more budgetary leeway than before.

At the same time, the EU Commission must be given more effective instruments to enforce budget rules.

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So far, the same debt reduction rules have applied to all countries whose debt exceeds the reference value of 60 percent of annual economic output.

However, they are not enforced because they are considered unrealistic.

The average debt ratio in the euro area is currently 100 percent.

"Let's be honest: we never enforced the debt rule," said Gentiloni.

A "credible and realistic reform" of the EU Stability Pact now presupposes that the states are picked up at their current debt level and are not treated according to uniform standards.

Federal government rejects change

Gentiloni's home country Italy has a debt ratio of around 155 percent in 2021, while the Greek national debt is highest at just over 210 percent.

For comparison: According to a forecast by the Kiel Institute for the World Economy (IfW), the German mountain of debt will rise to 69.3 percent this year and should then fall to 64.3 percent by 2023.

Gentiloni rejects the proposal by Klaus Regling, head of the euro crisis fund ESM, to raise the Maastricht limit from 60 to 100 percent.

"That just does not correspond to my idea of ​​a differentiated view of the states." In addition, the EU treaties would have to be changed to change the reference values, which is unrealistic.

Gentiloni also contradicted the position of the federal government, according to which the Stability Pact does not have to be changed because it is sufficiently flexible.

“It is true that the pact can be interpreted very flexibly.

As a member of various Italian governments, I have heard this on several occasions, 'said the Commissioner.

"But if at some point a flexible interpretation of rules can no longer be distinguished from their complete disregard, something has gone wrong." States that have a common currency should, if possible, also adhere to common rules.

mamk / Reuters