IMF urges EU to simplify its budgetary rules

The IMF yesterday called on the EU to simplify its budget rules to limit discretion in its application and focus on bringing down public debt.

The head of the IMF’s fiscal department, Vitor Gaspar told a seminar organised by the European Political Strategy Centre that the EU’s rules were overlapping, difficult to explain and they diverted attention from debt.

“The complexity allows for considerable discretion in the application of the rules. The track record of compliance is quite weak,” Gaspar said.

“Europe needs a governance framework that anchors public debt, is less complex, and easier to communicate,” he said.

Gaspar said the EU should focus on one objective — lowering public debt — and focus one way to get there; namely an expenditure rule, which limits the size of government spending depending on economic growth, combined with a debt break.

He said expenditure rules, which would be adopted at national level in the 28-nation bloc, would mitigate spending pressures, would be growth- friendly and help to enforce the goal of limiting debt.

The IMF made a similar call a year ago. A discussion on the way the eurozone manages its economy is scheduled for EU leaders later this month.

• Reuters