EU financial watchdog plans to alter pact rules
Under the current pact, EU States must keep deficits below 3% of GDP.
However, both Germany and France have exceeded this target, while in
Ireland, Eurostat rules have resulted in unforeseen results such as the postponement of construction of Cork’s School of Music.
The 60 million school’s construction was cancelled after Eurostat ruled that the Public Private Partnership due to build the new school should be classed as Government borrowing.
As a result, the school60m Cork School of Music has been teaching 2,500 full and part-time students in temporary facilities for almost two years. Addressing the Oireachtas European Affairs Committee yesterday, Finance Minister Charlie McCreevy said more flexibility in the way Eurostat defined such projects would be welcome.
Mr McCreevy said a possible solution to the problem could be unveiled in January when a Eurostat working group reports on possible changes to stability and growth pact rules. He told the committee it would be difficult to change the 3% rule embedded in the Maastrict Treaty, but indicated there may be scope for having the technical definitions altered to allow projects such as PPP initiatives to proceed without affecting our borrowing levels.
“I think we will have more success on the technicalities,” he said, adding that the new proposals could allow the exclusion of PPP projects from overall Government borrowing.
“It will be clearer what’s in and what’s out. At least the Eurostat working group will make things clearer,” he said
The working group will likely introduce proposals to deal with issues arising from concessions made to France and Germany which incurred government deficits greater than 3% in 2002. Mr McCreevy, who was supportive of the flexibility allowed to both Germany and France when they breached the 3% rule, said allowing more flexibility to deal with economic realities was the sensible thing to do. Mr McCreevy said Ireland’s EU presidency would continue to support the pact.
However, he indicated that more debate on the matter was likely.
