BRUSSELS (AFX) - The European Commission said the EU's stability and growth pact remains "the cornerstone of the fundamental good health of the European economy".
Speaking after the commission's surprise move yesterday to postpone the deadline for reaching budget balance to 2006, Jonathan Faull, spokesman for president Romano Prodi, said the mooted changes are designed to improve the implementation of the EU stability and growth pact, "taking into account the realities of the European economy today".
Faull said the pact's deficit limit of 3 pct of GDP remains intact and any breach of it requires swift, corrective action. Gerassimos Thomas, spokesman for economic and monetary affairs commissioner Pedro Solbes, acknowledged yesterday's commission debate on pushing out the deadline by two years was "a bit unprepared".
Thomas said it was the result of communication between Prodi and economic and Solbes as the weekend. He said Solbes has asked the euro group to discuss the mooted delay at its next meeting, scheduled for Oct 7 in Luxembourg. Faull and Thomas argued that the commission's move does not mean a relaxation of the stability pact.
Faull said the pact's medium-term fiscal objective of close-to-balance should incorporate explicit references to cyclical considerations. Countries that have not yet got their budgets to close to balance should have to reduce their deficits by 0.5 pct of GDP a year and to eliminate them by 2006 at the latest, he said.//www.forexdirectory.net