Insider Economy EU: Cyprus' draft budgetary plan compliant with stability and growth pact

EU: Cyprus’ draft budgetary plan compliant with stability and growth pact

The Draft Budgetary Plan of Cyprus along with the plans of Germany, Ireland, Greece, Cyprus, Lithuania, Luxembourg, Malta, the Netherlands and Austria are found to be compliant with the Stability and Growth Pact in 2020, according to the EU Commission assessment published on Wednesday in Brussels.

The European Commission, and more specifically Vice President Valdis Dombrovskis and Commissioner Pierre Moscovici, presented the EC opinions on euro area Member States’ 2020 Draft Budgetary Plans, taken steps under the Stability and Growth Pact and adopted the fourth Enhanced Surveillance Report for Greece, following the College of Commissioners’ weekly meeting.

On Cyprus the European Commission stated that there is limited progress with implementing the fiscal- structural part of the 2019 country-specific recommendations, but medium-term budgetary objective respected, compliance with the debt reduction benchmark are met both for 2019 and 2020

The Commission recalls that it issued a report on June 5, 2019 in accordance with Article 126(3) TFEU in which it concluded that further steps leading to a decision on the existence of an excessive deficit should not be taken.

Cyprus however remains in the list of countries with excessive macroeconomic imbalances along with Italy and Greece – not requiring though corrective action.

Furthermore, the Commission has also adopted the fourth report for Greece under the Enhanced Surveillance framework that was activated following the conclusion of the European Stability Mechanism stability support programme in August 2018. The publication of the report follows the fourth post-programme mission to Greece which took place from 23 to 26 September 2019.

The report concludes that Greece has prepared a budget for 2020 that meets the agreed primary surplus target of 3.5% of GDP in a growth-friendly manner, and that the government has overall taken the necessary actions to achieve its specific reform commitments for mid-2019, in the context of advancing a broader reform agenda. Further actions will be crucial to complete, and where necessary accelerate, reforms. The findings of this report will be discussed at the Eurogroup of 4 December 2019.

For the EU as a whole, the Commission recalls that since July this year and for the first time since 2002, no euro area Member State is under the Excessive Deficit Procedure. The euro area debt-to-GDP ratio is expected to continue its declining path of recent years and to fall from about 86% in 2019 to about 85% in 2020.

Following the recent Autumn 2019 Economic Forecast and consultations with the Member States, the Commission has adopted its Opinions on the Draft Budgetary Plans of all euro area countries. It has found that no Draft Budgetary Plan for 2020 shows particularly serious non-compliance with the requirements of the Stability and Growth Pact. Nine Member States’ Plans are compliant with the Stability and Growth Pact in 2020; two Member States are broadly compliant and for eight Member States, the Plans pose a risk of non-compliance with the Stability and Growth Pact next year.

The Draft Budgetary Plans of Estonia and Latvia are found to be broadly compliant with the Stability and Growth Pact in 2020. The implementation of the Draft Budgetary Plans might result in some deviation from the country`s medium-term budgetary objective for Latvia and from the adjustment path towards this objective in the case of Estonia.

For Belgium, Spain, France, Italy, Portugal, Slovenia, Slovakia and Finland the Draft Budgetary Plans pose a risk of non-compliance with the Stability and Growth Pact in 2020. The implementation of the Plans of these Member States might result in a significant deviation from the adjustment paths towards the respective medium-term budgetary objective. In the cases of Belgium, Spain, France and Italy, non-compliance with the debt reduction benchmark is also projected.

(Cyprus News Agency)

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