EU Member States Disagree On Debt Figures

I’ve been expecting something this: According to the EUobserver.com,  nine EU member states have proposed that the EU statistics on public debt should reflect which country has already reformed its pension system and therefore has a higher level of borrowing. But Germany warns against the move – of course –  saying it will cause confusion. (As if that is possible…)

“If you give in to nine member states you just water out the Stability and Growth Pact, which could be a huge problem.”

Felix Roth

“Maintaining the current approach to debt and deficit statistics would result in unequal treatment of member states and thus effectively punish reforming countries,” the nine EU members says in a letter last week addressed to the EU’s special task force on economic governance.

The letter is signed by officials of Bulgaria, the Czech Republic, Hungary, Latvia, Lithuania, Poland, Romania, Slovakia and Sweden.

The text, seen by the EUobserver, says the introduction of state-funded pension schemes was “critical for enhancing the long-term stability of Europe’s public finances.”

“But the experience of member states that have introduced such reforms is that they have led to a significant deterioration in the … statistics of their general government debt and deficit,” it adds, referring to “fundamental unfairness and inefficiency in the current Stability and Growth Pact.”

The basis of the reforms in central European and Baltic countries lies in transformation of a single distributive pay-as-you-go pension system based on the principle of solidarity between generations to a pre-funded capital-based system.

German Skeptics

The German finance ministry said on Tuesday that it is “very skeptical” about making a change which could make figures from the relevant countries “more difficult to interpret at the EU level.”

“It would also disadvantage governments that have chosen different ways of reforming their pension systems and share the costs of the reform differently,” the German communique noted, according to Bloomberg.

The European Commission, said on the same day that it is mulling over its position on the issue.

“Of course the commission would like the criteria on public debt to be strengthened and to be taken more seriously so it is highly relevant that this matter be raised now,” the body’s spokesman Amadeu Altafaj told reporters.

The EU executive aims to react to the letter ahead of the next meeting of the taskforce on September 6th.

The taskforce, led by EU Council President Herman Van Rompuy, is looking into new EU fiscal rules designed to prevent a repeat of the recent financial crisis.

Felix Roth, a Brussels-based analyst from the Centre for European Policy Studies think-tank, have landed on German side of this debate.

“If you give in to nine member states you just water the Stability and Growth Pact down, which could be a huge problem, as we have seen now during the crisis,” he says to the EUobserver.com.

Anyway – the show will certainly go on for a while more.

Related by the Econotwist:

Internal Wrangles Could Leave EU Without 2011 Budget

EU Wants To Tax Bonds Of Deficit Countries (And Old People)

EU’s Administrative Costs Set To Rise 4,4% In 2011

Warns Against Euro Zone “Elite”

Transantlantic Bailout Buddys Agree To Disagree

Bundesbank: Ireland Will Destroy The Euro Zone

Bundesbank Suspects A French Conspiracy

Secret Plan To Undermine The EU Parliaments Authority?

Germany’s Manic Depression

Citigroup: Euro Zone No Longer A Single Economy

EU-US Top Leaders Agree To Meet In Lisboa On November 19th

E.U. Parliament To Investigate Euro Zone Bailout

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