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BRUSSELS, May 7 (Reuters) - The European Commission decided
on Wednesday to end fiscal disciplinary steps against four
European Union countries as their budget deficits fell below the
EU ceiling last year and are expected to stay there.
The proposal, when approved by European Union finance
ministers, will mean that for the first time since 2002 none of
the 15 countries now using the euro is in breach of the bloc's
budget rules, the Stability and Growth Pact, on deficit size.
The Commission said in a statement it would ask EU finance
ministers to formally close excessive deficit procedures against
Italy, Portugal, the Czech Republic and Slovakia, which all cut
their budget gaps to below 3 percent of gross domestic product.
Economic and Monetary Affairs Commissioner Joaquin Almunia
said in the statement that the improving public finances showed
EU budget rules were working well, but called for more efforts.
"Italy must build on the 2007 result to achieve a balanced
budget as soon as possible and put the national debt firmly on a
downward path to free up resources for growth-enhancing
measures," he said.
The Commission expects the budget deficit in Italy, the
third biggest euro zone economy, to increase to 2.3 percent of
GDP this year and 2.4 percent in 2009 from 1.9 percent in 2007.
"These budgetary developments suggest that the deficit has
been brought below the 3 percent reference value in a credible
and sustainable manner. However, fiscal consolidation in Italy
needs to continue," the Commission said.
Almunia praised Portugal for reducing the budget gap below
the EU threshold one year ahead of time, but because the deficit
is likely to increase in 2009 to 2.6 percent from 2.2 percent
expected this year, Lisbon should maintain its efforts.
"Portugal is ... encouraged to pursue the course of
budgetary adjustment and structural reforms in order to create
more growth and jobs," he said.
Almunia said the Czech Republic, even though its deficit is
to fall to historically low levels next year, should intensify
reform of pensions and health care because its ageing society
will put public finances under strain.
Slovakia, which was invited by the Commission to join the
euro zone from next year, must be more ambitious in deficit
cutting because of very strong growth.
"Its upcoming membership of Economic and Monetary Union
makes this particularly important," Almunia said.
Once EU finance ministers approve the Commission's proposal
to end the procedures against the four countries, only Poland
and Hungary will remain subject to the EU's disciplinary budget
action.
However, the Commission said it was likely to propose to end
the steps against Poland as well in June.
(Reporting by Jan Strupczewski; Editing by Dale Hudson/Ruth
Pitchford)
