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UPDATE 1-France's Lagarde urges flexible EU debt rules
Tue, 2nd Jun 2009 14:18
BERLIN, June 2 (Reuters) - French Economy Minister Christine Lagarde proposed on Tuesday loosening the European Union's debt rules, saying deficits arising from economic stimulus packages should be handled independently.
Lagarde told Germany's Financial Times Deutschland: 'These deficits caused by the crisis, which also lead to crisis-linked debts, should in my view be handled separately.'
Lagarde said she was committed in principle to the European Stability and Growth Pact, which underpins the euro currency.
'We need collective discipline,' she said, but added: 'The priority is not yet to reduce deficits and debts ... At the moment we must concentrate fully on saving jobs and creating new ones.'
The Stability Pact says that budget deficits should not be higher than 3 percent of gross domestic product and that governments should aim to have budgets in balance or in surplus.
Only six EU countries will stay below the EU deficit threshold this
year and four in 2010, the European Commission has forecast, as a result of higher welfare spending, lower tax revenues and discretionary stimulus packages to boost growth.
Lagarde has said France was still aiming for a deficit of under the EU's three percent limit in 2012.
The Financial Times Deutschland said Lagarde was not calling for deficits caused by the financial crisis to simply be substracted from the overall deficit figure.
'I don't have a ready response yet on what exactly we should do, but we need a debate,' she said, adding she had already brought up the issue at the last meeting of European finance ministers. 'I will come back to that,' she said.
(Writing by Paul Carrel and Kerstin Gehmlich, editing by Mike Peacock) Keywords: EU FRANCE/DEFICITS
(paul.carrel@reuters.com; +49 30 2888 5214; Reuters Messaging: rm://paul.carrel.reuters.com@reuters.net)
COPYRIGHT
Copyright Thomson Reuters 2009. All rights reserved.
The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
Lagarde told Germany's Financial Times Deutschland: 'These deficits caused by the crisis, which also lead to crisis-linked debts, should in my view be handled separately.'
Lagarde said she was committed in principle to the European Stability and Growth Pact, which underpins the euro currency.
'We need collective discipline,' she said, but added: 'The priority is not yet to reduce deficits and debts ... At the moment we must concentrate fully on saving jobs and creating new ones.'
The Stability Pact says that budget deficits should not be higher than 3 percent of gross domestic product and that governments should aim to have budgets in balance or in surplus.
Only six EU countries will stay below the EU deficit threshold this
Lagarde has said France was still aiming for a deficit of under the EU's three percent limit in 2012.
The Financial Times Deutschland said Lagarde was not calling for deficits caused by the financial crisis to simply be substracted from the overall deficit figure.
'I don't have a ready response yet on what exactly we should do, but we need a debate,' she said, adding she had already brought up the issue at the last meeting of European finance ministers. 'I will come back to that,' she said.
(Writing by Paul Carrel and Kerstin Gehmlich, editing by Mike Peacock) Keywords: EU FRANCE/DEFICITS
(paul.carrel@reuters.com; +49 30 2888 5214; Reuters Messaging: rm://paul.carrel.reuters.com@reuters.net)
COPYRIGHT
Copyright Thomson Reuters 2009. All rights reserved.
The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
