IMF asks in Brussels that fiscal rules in Europe be applied according to each country’s debt

International Monetary Fund (IMF) Considers whether or not to debate withdrawal fiscal rules The EU is more timely than ever, now that the continent is a “second economic crisis“For the war in Ukraine for the first time since the pandemic that we have not yet recovered from.

As claimed by IMF Deputy Director General Gita Gopinath during her participation at the Brussels Economic Forum in the community capital on Monday, new tax rules It will take effect when you deactivate it escape clause The Stability and Development Treaty would have to be Easy, they should find medium run balance More should be allowed based on the public debt levels of each country more autonomous at the national level”.

the organization he runs Kristalina Georgieva He recalled that many countries would now have to incur significant investments and expenses, for which he specifically recommended those who have high level of debt public presentation a Medium Term Fiscal Consolidation Plan.

“Spend is very high on the agenda and given that we live in a world that has suffered an economic setback, it is important to that countries have good financial plans that in the medium term demonstrate that they will return to reasonable spending levels The debate on fiscal rules after the crisis and in this sense is very important and should be assessed in the current context in which the debt levels are very high”, he claimed.

Spainwith public debt 118.4% of GDP at the end of 2021, which is expected to fall to 115.1% this year, according to economic forecasts from the European Commission, making it one of the countries that has repeatedly stated Create a Tax Consolidation Plan in the medium term. bank of spain and independent authority for financial responsibility (AIREF) are among the institutions that have advised it, but treasure He has always defended that this was not the right time to tackle this task.

Paolo Gentiloni, The Commissioner for Economic Affairs agreed with an IMF spokesperson that the new financial regulations should ensure that “Gradual reduction of credit without impeding growth“, improve the level of responsibility of each country and be simple.

“mechanics” next generation This might be an example to look at, because it’s a way in which we have the decision-making power of the countries in each plan, there’s a lot of negotiation between the countries and the commission, and then implementation and control by the commission. Is. this method May be useful for fiscal policy in the medium term Making debt reduction more realistic than on paper. It is a challenge, but I am glad that the IMF sees that the solution is not so simple, because finding a consensus is difficult,” the commissioner said.

However, he has defended that “knowing the challenges he must face is part of the solution” and has observed that he has “made considerable progress in the debate”. In fact, he recalled that a few weeks ago, countries were “as different” as Spain and the Netherlands presented a joint resolution to amend these rules. In particular, he defended the creation of “country-specific consolidation strategies that are realistic, gradual, but ambitious and conducive to economic growth and job creation, inspired by the governance of the next generation of EU instruments”.

green infection

IMF and European Commission spokespersons have also addressed this problem. Ecological transition costs and the extraordinary cost of switching from fossil fuel use to clean energy.

In this sense, Gentiloni has maintained that The EU cannot “postpone” this transition, “The EU must first ask itself how it is going to behave in this situation, because we can respond with the idea that we live in difficult times, we will have to face Russian gas and oil liberties. , so we can postpone the ecological transition. And come back in a few minutes. Years. I think it would be a mistake. The role that the EU should have in this process is leadership”, he defended.

They have argued that limit carbon adjustments may initially be seen as a policy against other countries, but believes they will gradually be seen as a benchmark. With regard to funding this ecological transition, he speculates: An investment of 500,000 million euros that the EU needs.

In this regard, the Director of the IMF has requested that private investmentSince “the scale of investment required is much greater than what public money can provide.”

impact of the pandemic

Both leaders agreed that Russia would have a tendency to invade Ukraine negative consequences for the world economy.

“What we are facing now is The second black swan with two wings, We had hoped in January that the economy would grow well but the war added to some of the adversities that we faced last year and now we are facing challenges. War is a human problem first, we cannot just look at the economy. But at the economic level we are reacting as one in the EU,” he defended.

The former Italian prime minister has insisted that, although there will be consequences for the war, the EU cannot escape its responsibility or its ambitions. ,Growth is falling and we have the highest level of inflation We have a single currency, but those challenges should not change the ambition of the European Union. The lesson we’ve learned in recent years is that we need energy independence and a shared defense and we need to look at how to manage it together.”

With regard to measures being adopted by countries to reduce the impact of war, he is not in favor of a fiscal policy of global support, as implemented during the pandemic, but instead go for the finer measuresFocused on the weakest and temporary above all.

,Governments now have to be more selective And I am not saying that because I am concerned about the stability of credit, because financing conditions will remain favorable and even negative in the long run, but with inflation we need to be more selective And this is what we will suggest to the countries in this spring package”, he insisted.

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