VIENNA, Nov 3 - European Central Bank Governing Council Member Klaus Liebscher said on Monday he expected European Union budget rules to be fully enforced in the face of countries flouting the region's fiscal Stability Pact. "In the interests of the credibility of the Stability Pact, all measures that are foreseen by the procedure are necessary and appropriate," Liebscher told reporters when asked what signal he expected EU finance ministers to give about the fiscal rules at their meeting in Brussels on Tuesday. Liebscher declined to comment when asked whether France might be sanctioned for breaching the budget rules, which require states to keep deficits below three percent of gross domestic product. France has drawn up a budget that forecasts a 2004 deficit of 3.6 percent of GDP and should, under the timetable laid down by the Stability Pact, be heading for fines.
But the European Commission, the guardian of the Pact, has given France an extra year to rein in its deficit given sluggish economic activity, as long as it makes more budget cuts in 2004. Liebscher, who is also head of the Austrian central bank, was speaking on the margins of the East-West Conference on the economic potential for an enlarged Europe, sponsored by the Austrian National Bank and Joint Vienna Institute.//