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EU agrees to impose tighter fiscal discipline

Tuesday, January 31, 2012

Laaska News Jan 31, 2012

The leaders of the European Union have agreed on a new treaty aimed at imposing tighter fiscal discipline on member states.

The agreement came at their first summit of the year on Monday in Brussels, Belgium.

Twenty-five of the EU’s 27 countries agreed to the “fiscal compact.” It would allow the EU to punish a member if it failed to keep up with its fiscal health.

The leaders also agreed to start the European Stability Mechanism, the EU’s bailout fund, in July, one year earlier than originally planned.

They also discussed strategies for economic growth and employment that are indispensable to help vitalize fiscal health.

Also on the agenda were Greece’s weak public finances that triggered the European debt crisis.

The Greek government is facing difficulty negotiating with private bondholders to reduce its huge debt. If no deal is reached, Greece could default as a large amount of its debt is due in March.

Before the opening of the summit, Germany proposed that Greece surrender control of its budget and fiscal authority to outside institutions in the European Commission.

But Greece is strongly opposed to the suggestion. Jean-Claude Juncker, the prime minister of Luxembourg and current chair of the eurozone finance ministers meetings also said such a proposal is utterly unacceptable.




25 states sign up to EU budget pact


25 members of the 27-nation European Union have signed up to the EU budget stability pact, proposed at the previous EU summit in December 2011, EU President Herman Van Rompuy tweeted on Monday.

The document puts a country’s budget deficit ceiling at 0.5 percent of GDP – a “golden rule” which must now become law in all EU countries. The Czech Republic and Britain refused to sign up, and Poland said it would only sign up if allowed to take part in Eurozone summits.



Laaska News.