Portuguese Prime Minister António Costa on Thursday called for a permanent crisis stabilisation mechanism to respond to future situations in the EU, calling the proposals to review the seven-year EU budget and budget rules “insufficient”.
Costa responded to questions about the two budget-related proposals on the eve of the European Council Summit in Brussels, where both proposals will be on the table.
“It is not a question of Portugal’s interest. It is Europe’s interest, and both proposals are quite insufficient. The expectation created for the sovereign wealth fund is manifestly unsatisfied with this proposal that is now being presented” for a review of the EU budget for 2021-2027, said Costa.
“There is one thing that is evident and clear: Europe increasingly needs a permanent crisis stabilisation mechanism”, Costa added.
“We know, fortunately that crises are not permanent, but that, unfortunately, they are recurrent, so we cannot reopen the discussion whether or not we need to have an instrument every time there is a crisis. We have very important proof. When we had the financial crisis, we did not have a support mechanism, and the results were what they were, and, in the face of the COVID-19 crisis, a set of support mechanisms were created”, he added.
“Today we have the demonstration that in a crisis where there was no instrument, things went wrong, and in a crisis where there was a support instrument, things went better, therefore […] we should avoid what went wrong, and we should ensure and stabilise what went well as a good practice,” he said.
He said, “in all sincerity, I find it difficult to understand why some member states still refuse to accept what seems to me […] to be a fairly obvious result”.
Two weeks ago, the Commission proposed a €50 billion reserve to support Ukraine’s recovery, €15 billion for migration management and €10 billion for ‘green’ and technological investments.
At stake is a revision of the Multiannual Financial Framework (MFF), the EU’s long-term budget for 2021-2027, which, together with the EU Recovery Fund, amounts to €2.018 trillion in current prices (€1.8 trillion in 2018 prices), in a response adopted in 2020 to repair the economic and social damage caused by the pandemic and contribute to the digital and ecological transition.
It is up to the co-legislators to decide on this proposed revision, supposed to come into force on 1 January next.
European budget rules, with ceilings for the deficit and public debt, are due to resume in 2024, with the reform now being negotiated in the EU.
Last April, the European Commission proposed risk-based fiscal rules with a technical path for indebted EU countries, such as Portugal, giving them more time to reduce deficit and debt.
The economic governance rules, suspended since the pandemic until the end of this year, require member states’ public debt not to exceed 60% of GDP and impose a deficit below 3% of GDP.
(Pedro Morais Fonseca | Lusa.pt, Edited by Nuno Simas| Lusa.pt)
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