ECB warns against relaxing stability pact

June 23, 2014 - 9:20:27 am

BERLIN: A European Central Bank executive warned against proposals by centre-left leaders in Europe to relax EU public deficit rules, in comments published in a German newspaper yesterday.

“The Stability and Growth Pact should not be relaxed to the point where it loses its credibility,” ECB executive board member Benoit Coeure was quoted as telling the Frankfurter Allgemeine Sonntagszeitung. “Let’s not repeat the mistakes of 2003”, when Germany and France breached the strict budget rules, he told the conservative newspaper.

In the debate over how to revive crisis-hit economies, countries including France and Italy have called for more flexibility and time in meeting the strict conditions of the Stability Pact.

Under the EU’s rules, public deficits — the shortfalls between government income and spending — should not exceed 3.0 percent of annual gross domestic product.

Accumulated debt, the sum of all those annual deficits, is supposed to be kept at 60 percent of GDP, under the EU’s Stability and Growth Pact. AFP