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  • 16-01-2021 09:49

EU/Presidency: New suspension of SGP depends on spring assessment - Dombrovskis


Lisbon, Jan. 16, 2021 (Lusa) - European Commission executive vice-president Valdis Dombrovskis told Lusa that the suspension of the Stability and Growth Pact rules in 2022 would depend on economic developments, pointing to a possible decision in the spring.

"Our plan is to return to that discussion and potential decisions in the spring cycle of the European semester, which is typically in late May and early June," Valdis Dombrovskis told Lusa.

The executive vice-president with the portfolio 'An economy at the service of the people' in the college of European commissioners said that a possible further suspension of the rules of the Stability and Growth Pact (SGP) "will depend on the economic situation and how we see it in May/June".

"We are not prejudging the outcome of that decision", he said, pointing out for the time being that "what is clear to the member states for 2021 is that the safeguard clause [allowing the suspension of the SGP] will continue to be activated".

The suspension of the SGP rules, implemented at the beginning of the economic crisis triggered by the Covid-19 pandemic, allows member states not to comply with the Brussels budgetary rules, such as the 3% of gross domestic product (GDP) limit on the government deficit and the 60% of GDP limit on the government debt ratio by the end of 2021, and there is still no European Commission decision for 2022.

Asked whether all options are on the table, Valdis Dombrovskis, who also has the trade portfolio, stressed his position.

"Certainly. We are not prejudiced against any decision, we will have to see the economic situation and make the decision based on that", said the Latvian commissioner.

"We are still facing a very complicated situation regarding the Covid-19 pandemic. 2020 was a year of decisions, we decided on maximum flexibility within our budgetary and state aid rules, allowing member states to support their economies, companies, workers, and finance health spending," he said.

On Friday, Portugal's prime minister, António Costa, said that there was consensus that support to European member states should only be withdrawn when their GDP returns to 2019 levels, allowing for a suspension of the Stability Pact beyond 2021.

Costa was speaking at a joint press conference with European commission president Ursula von der Leyen at the Centro Cultural de Belém, after asking whether the extension of the health crisis due to Covid-19 could also motivate a decision to extend the suspension of the Stability Pact rules until the end of 2022.

Without taking a definitive position on a possible extension of the suspension of the Stability Pact rules beyond 2021, the Portuguese prime minister noted, however, that "there is a very large consensus among economists at the international level that support should not be reduced too soon".

Costa said the most consensual idea "is to return to compliance with the rules [of the Stability Pact] when the 2019 levels of Gross Domestic Product (GDP) are reached.

JE/ADB // ADB.

Lusa