EU changes fiscal policy guidance in 2023 due to Russia sanctions

The European Commission released this Wednesday (2) a new document that provides Member States with guidelines on the conduct of fiscal policy in 2023. According to the text, the communication is presented in the context of the “unprovoked and unjustified” invasion of the Ukraine by Russia.

“In solidarity with Ukraine, the EU has approved an unprecedented package of economic sanctions that will have a serious impact on the Russian economy and political elite,” the statement said.

Thus, according to the Commission, “there is a need for strong coordination of economic policies in response to rapidly changing circumstances”.

The new guidelines are based on five fundamental principles: policy coordination must be ensured; debt sustainability must be ensured through high-quality, gradual fiscal adjustment plus economic growth; investment must be fostered and sustainable growth promoted; fiscal strategies consistent with a medium-term approach to fiscal adjustment should be promoted; and fiscal strategies should be differentiated and take into account the size of the euro area.

The document also points out that it sets out preliminary fiscal policy guidance for 2023, which will be updated as necessary. “Future guidelines will continue to reflect the global economic situation and the specific situation of each Member State”, he highlights.

Source: CNN Brasil

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