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EU finance ministers agree to tighten sanctions on overspenders
Date: 2010/9/30 Click: 975
European Union (EU) finance ministers have agreed to tighten sanctions against repeated violators of the bloc's budget rules and pay more attention to debt levels of member states in a bid to avoid another sovereign debt crisis, local press reported Tuesday.

"The discussion today showed a very large degree of convergence on important issues related to budgetary and economic surveillance," said a statement issued by EU Council President Herman Van Rompuy following Monday night's meeting of the task force composed of the ministers.

More attention should be paid to the debt situation of member states, the statement said.

According to the EU's Stability and Growth Pact (SGP), the budget deficit of a member state should be kept under 3 percent of its gross domestic product (GDP), while its debt should be kept under 60 percent of its GDP.

The ministers also decided to develop a new enforcement system, according to the statement.

"There is an agreement that, in a system where fiscal responsibility remains largely under the responsibility of national authorities, there is a need for a credible enforcement mechanism at the EU level," said the statement.

Another consensus reached by the ministers was that sanctions should be strengthened in the eurozone, and conditionality for the use of EU funds should be linked to the fulfillment of the obligations under SGP as soon as possible.

They also voiced support to the idea of semi-automatic sanctions preferred by the European Commission and some member states.

"Whenever possible, decision-making rules on sanctions should be more automatic and based on a reverse majority rule, implying a Commission proposal is adopted unless rejected by the Council," said the statement.

European Commissioner for Economic and Monetary Affairs Olli Rehn said "semi-automatic" means that "once there is a decision on a country on an excessive deficit procedure, then the decision on sanctions taken can only be reversed by a qualified majority."

The European Commission will put forward detailed legislative proposals on economic governance reforms on Wednesday and the task force will submit its full report to EU leaders at the end of October.
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