Europe

Spain welcomes EU's decision to suspend budget rule

Fiscal rules to be suspended for another year due to rising energy prices, supply disruptions, says European Commission

Beyza Binnur Donmez   | 23.05.2022
Spain welcomes EU's decision to suspend budget rule FILE PHOTO

ANKARA

Spanish Economy Minister Nadia Calvino on Monday backed the EU's decision to suspend the budget rule for one more year, calling it "positive."

"I think it is positive that this general escape clause is extended for another year, since it would not be understood at a time of such high uncertainty as the one we find ourselves in," Calvino told reporters in Brussels before attending the Eurogroup meeting.

"Well, if it was restored, it would not apply again as it is. Some rules have to be revised to adapt to the present needs and to all the future investment needs of the European Union," she added.

She reminded that Spain presented a joint position paper with the Netherlands at the last meeting of the Eurogroup "to propose and urge the European Commission to address this revision of the fiscal rules as soon as possible."

Earlier in the day, the EU extended another year the exemption under strict budgetary rules for member states due to the ongoing Russia-Ukraine war that started on Feb. 24.

As part of the 2022 European Semester Spring Package, the European Commission decided to prolong into 2023 the escape clause of the Stability and Growth Pact, the bloc’s fiscal rules preventing member states to spend over their means.

The principle of fiscal prudence, demanding EU member states to keep the budget deficit under 3% and public debt under 60% of the GDP, was suspended in 2020 because of the COVID-19 pandemic that put an extraordinary burden on state budgets.

According to the latest forecasts, the EU expects 2.7% GDP growth for this year, down from the earlier projection of 4%.


- Spain's economy to expectedly grow 4-4.8% this year

Citing forecasts of different organizations, Calvino said Spain's economic growth during 2022 would be around 4-4.8%, "which demonstrates that strong economic recovery of our country is expected to continue also in 2023."

Spain has reduced the public deficit by more than 3 percentage points and the public debt by more than 1.5 percentage points, she said.

"Our forecasts are to reduce the deficit by around 2 percentage points in 2022 and 3 percentage points in the case of the debt, and therefore continue with an intense path of reduction of fiscal imbalances to place us below 3% of GDP and public debt below 110% of GDP at the end of the forecast period in 2025," Calvino noted.

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