Minister G. Skaistė: “In Revising the EU Fiscal Rules it is Important to Ensure Sustainability of Public Finances and to Strengthen Incentives for Growth”

At the Eurofi Financial Forum in Slovenia Minister of Finance Gintarė Skaistė is participating in the discussion on the review of the Stability and Growth Pact (SGP), where she notes the importance of ensuring the sustainability of public finances in the long term and strengthening incentives for sustainable economic growth in reforming the EU fiscal rules.

„Despite the increase in debt levels across the European Union in the context of the pandemic, ensuring the sustainability of public finances in the long term should remain a key priority. At the same time, it is important to understand that stability without growth may lead to stagnation, so we need to think about the ways how to stimulate productive investments by the countries, which would create the basis for a rapid economic growth and thereby contribute to the same improvement of fiscal sustainability", – notes Minister of Finance G. Skaistė.

The SGP review process was planned to start well earlier, but discussions were interrupted due to the pandemic. The review process is likely to be relaunched later this year with the proposals made by the EC. Currently, due to the pandemic, the application of the EU fiscal rules is temporarily suspended, however it is foreseen to return to normal application of the SGP as of 2023.

According to the Minister, the COVID-19 pandemic has caused a severe economic shock to the economies of the EU Member States. However, in discussing the directions for revising the EU fiscal rules it is necessary to assess not only a negative impact of the pandemic, but also long-term challenges such as population ageing, green and digital transformation. The reform of the SGP also needs to ensure that fiscal rules are oriented towards the prevention of macroeconomic imbalances, fiscal sustainability in the medium and long term, and are transparent and predictable.

The Minister also notes that there was a room for simplification of the rules to make them easier to understand for policymakers and the general public. In order to boost growth, it would be appropriate to consider the possibilities of existing flexibility for investments by promoting productive investments that increase the growth potential of the economy and strengthen fiscal sustainability in the long term. To this end, appropriate safeguards are also necessary to ensure the quality of such expenditure.

On 9-11 September Minister of Finance G. Skaistė will attend the Eurogroup (EG) and ECOFIN (informal) meetings. She will also meet the European Commission (EC) members – Mr Paolo Gentiloni, European Commissioner for the Economy, Ms Mairead McGuinness, European Commissioner for Financial Services, and Ms Kristalina Georgieva, Managing Director of the International Monetary Fund (IMF).