Uncertainty has risen sharply, the Eurogroup said in a statement today, stressing that “the economic impact of Russia’s war on Ukraine has not yet been determined and the risks to supply chains, energy prices and inflation remain”. high for more than expected “.
In a joint statement, eurozone finance ministers said “our fiscal policies must remain flexible” and stressed that “we are ready to adapt our policy stance to changing circumstances as required”.
“At the same time, we will urgently consider and evaluate specific options, based on Commission Communication of 8 March 2022 to address the impact of rising energy prices on our citizens and businesses, especially vulnerable citizens and our SMEs, “said the Ministry of Finance, adding:” The financial guidance agreed today by the Eurogroup will depend on the development of economic situation “.
“Unprovoked and unjustified military attack”
The Ministry of Finance also emphasizes that the EU is at a turning point due to the “unprovoked and unjustified Russian military attack on Ukraine”.
The Eurogroup emphasizes that “it fully supports all the actions and sanctions taken by the EU and its allies against the aggressor. We also recognize that additional financial measures may be required to support Ukraine and protect our core values. in the EU ”
At the same time, they note that the fundamentals of the Eurozone economy are strong. The Commission’s winter forecast, released on 10 February, confirms that the economy has recovered strongly from the pandemic, with GDP returning to pre-crisis levels by the end of 2022 in all Member States and unemployment falling to historical low until the end of 2021.
The fiscal strategy of 2023
The Ministry of Finance welcomes the recent announcement of the Commission for the “coordination of the fiscal policy for 2023”. In the light of the Commission’s assessment, the Ministry of Finance states, we confirm the fiscal policy strategy for this year, as set out in our December 2021 statement on the draft budget plans for 2022. At the same time, the Ministry of Finance expresses its support for the Commission , based on its winter forecast for 2022, the transition from an overall supportive fiscal stance in the euro area to a generally neutral overall fiscal stance next year seems appropriate, although they indicate that they are prepared to react “to the evolving economic situation, in view of the high level of uncertainty “.
Finally, they note “the readiness of the Commission to adjust its guidance as required and at the latest as part of the Commission’s spring package for the European Semester at the end of May 2022”.
It is necessary to diversify fiscal strategies
The Ministry of Finance adds that based on the current state of the financial situation, a diversification of fiscal strategies between Member States is necessary.
As they point out, this will also help to achieve a balanced overall fiscal stance in the Eurozone. In particular, in order to maintain debt sustainability in Member States with high public debt“We agree that initiating a gradual fiscal adjustment to reduce their public debt is the right approach, if conditions allow.”
“This adjustment should be integrated into a credible medium-term strategy that will continue to drive the investment and reforms needed for the twin transitions and improve the composition of public finances.”
From the other side, Member States with low and medium debt levels should give priority to public investment, where necessary. Overall, this will help to achieve the appropriate overall fiscal direction.
Finally, the Ministry of Finance notes that Member States should increase the resilience of their economies and promote and protect high-quality, nationally funded investments to lay the foundations for high sustainable development and achieve the dual transition goals.
Regarding the review of economic governance, “the Eurogroup will continue to be actively involved in this process,” the statement concluded.
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Source: Capital
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