* Pension reformers want leeway on deficit, debt
* Many other countries sceptical, but fight to continue
* Some countries dismantling pension reforms
By Marcin Grajewski
BRUSSELS, Oct 29 (Reuters) - Poland and other EU states that
have overhauled their pension systems appeared to be winning
little ground at an EU summit on Friday in their battle for
leeway on budget deficits to reflect the costs of their reforms.
Nine countries, including Sweden and the Czech Republic,
demanded in August to be allowed to write off the full cost of
pension reform from their deficits and public debt, which would
help them avoid EU disciplinary action. []
But Polish Prime Minister Donald Tusk admitted there was
limited appetite among other EU leaders at the summit to grant a
far-reaching deficit and debt reprieve to pension reformers.
"The issue is difficult as there is no enthusiasm in the
Council (governments) to accept the farthest-going version of
the plan," Tusk told reporters late on Thursday.
Poland and others still hoped to include their pension
demands in the summit's final statement, which would help them
fight on by giving a basis for further scrutiny of the problem.
Tusk said he would raise the issue again at the December
summit of the 27-member bloc.
The proposal on pensions was part of a debate on sharpening
EU budget discipline rules to ward off a sovereign debt crisis,
with key decisions taken on Thursday. []
The executive European Commission went a little way to meet
the demand in September, proposing pension reformers enjoy a
five-year grace period during which their budget gaps can exceed
the EU ceiling of 3 percent of gross domestic product and/or
their debt exceed the cap of 60 percent of GDP. []
Poland, Slovakia and other countries believe the proposal is
inadequate and want this leniency to be extended long-term.
They argue the decision would encourage other countries to
carry out reforms which are needed because of their ageing
populations but which have provoked protests in some cases.
[] []
The countries also say that investments in pension funds do
not have the effect of fiscal loosening on the economy.
Those countries have created or plan to set up private
pension funds, to which the state-supported, pay-as-you-go
pension systems contribute certain sums. As a result, national
budget subsidy to the pension system needs to be higher.
Polish pension reform costs now run at 2.5 percent of GDP.
Polish officials have said the prospect of EU disciplinary
action for an excessively high deficit or debt would encourage
countries to dismantle pension reforms.
Hungary has suspended state transfers to private pension
funds to cut its deficit faster, while Estonia and Latvia
reduced their payments.
Germany objects to the plan, as it wants the bloc to adopt
the strictest possible fiscal rules.
Pension reformers are Lithuania, Latvia, Bulgaria, Sweden,
Slovakia, Hungary, Romania, Poland and the Czech Republic.
(Editing by Catherine Evans)
