Vice-Minister of Finance M. Liutvinskas: "EU Fiscal Rules Will Be Revised Taking Into Account the Emerging Challenges"

On 13-14 March, Vice-Minister of Finance Mindaugas Liutvinskas will participate in the meetings of the Eurogroup (EG) and ECOFIN in Brussels, where the greatest attention will be paid to the revision of the EU fiscal rules. The economic and financial impact of Russia's war against Ukraine will be also discussed.

The ECOFIN meeting is expected to approve the Council conclusions on the revision of the EU fiscal rules, which will define the main elements of the new system of the rules and provide guidance to the European Commission (EC) in preparing legal proposals.

"The process of revising the EU fiscal rules is moving forward – they will be reformed in response to the emerging challenges, including the need to strengthen the sustainability of public finances and the need to invest in green transition and economic competitiveness. It is important that the new EU fiscal system leads to a real reduction of debts in highly indebted countries, is transparent, applies equally to all countries and is effectively implemented. In addition, in the face of Russia's war against Ukraine, it is necessary to ensure that fiscal rules create opportunities for sufficient investments in strengthening defence capabilities," stated Vice-Minister of Finance M. Liutvinskas.

Ministers will also exchange opinions on the communication on fiscal policy guidelines for 2024 adopted by the EC on 8 March. It should be noted that the EC proposes to deactivate the application of the general escape clause from 2024 and to return to the application of fiscal discipline requirements after an almost four-year hiatus.

"We support the direction of the European Commission's communication – a return to the fiscal discipline rules in 2024, without large-scale fiscal stimulus. In the face of uncertainty, the fiscal policy must remain flexible, and the necessary support measures must be targeted so as not to promote inflationary pressure and not create a significant negative impact on public finances," said Vice-Minister of Finance M. Liutvinskas.

The EC communication on the implementation of the Recovery and Resilience Facility (RRF) adopted on 23 February 2023, which reviews the two-year experience of the RRF implementation and provides additional EC guidelines for the flexible implementation of the RRF plans, will be discussed during the meeting. There will also be a discussion on the contribution of the RRF and REPowerEU to the green transition and independence from Russian energy resources.

As every year, in preparation for the annual EU budget procedure, the Council prepared conclusions on the guidelines for the establishment of the EU’s budget for 2024, which will be approved during this ECOFIN meeting. The annual report on the implementation of the EU’s budget for 2021 will be also approved. Among other issues, during the meeting, preparations will be made for the spring meetings of the International Monetary Fund and the World Bank in April.

During the EG meeting, it is planned to discuss the development progress of the digital euro project and its public policy goals. The EC foresees to initiate a legislative proposal on the legal status of the digital euro in 2023.

The EG meeting will also discuss the euro area's economic and financial situation and outlook, as well as inflation trends.