Friday, April 29, 2016

Jeroen Dijsselbloem: The plan of the Eurogroup chairman to simplify the Stability Pact – Les Echos

Jeroen Dijsselbloem (President of the Eurogroup)

Jeroen Dijsselbloem, the president of the Eurogroup, wants to reach an agreement on Greece by 9 May when the next Eurogroup. He explains the “Echos” and the Italian newspaper “La Stampa” the problems still to be overcome and unveils reform that calls for, which would involve more Brussels in the economic policy of each Member State.

the postponement this week of the Eurogroup on Greece it is worrying?

remember that many progress has been made in recent days. For example, there is an agreement between the institutions (ECB, IMF, European Commission) and the Greek government in terms of savings and reforms (including that of pensions) to enable Greece to achieve a primary budget surplus 3.5% in 2018. But there was an agreement to find a second package of measures called “emergency” that will apply only if the fiscal performance of the country is worse than expected. This proved harder to develop than we had thought. Legally, it is very complicated because the Greek system prevents legislating measures that you could not apply. If you legislate, it is to implement measures! It is primarily a question of time: we need more time to find an alternative approach




These new requirements they reflect a confidence problem. vis-à-vis Athens?

No. We need this contingency plan because the IMF has different economic forecasts than those of the Commission and Greece. There is no problem of trust between Europeans. It is a forecasting problem, nothing more. On trust, we have come a long way. After the low point reached last summer, the atmosphere has changed and we must acknowledge the very serious and constructive work of the Greek government.




Imposing a new plan austerity “rescue” while the previous is not even applied yet, is not it undermine the political authority of Alexis Tsipras?

You can also see the things differently. If the Greeks are some of their fiscal path, they can legitimately say that they will not have to apply the new measures. For them it is not a problem so serious. Moreover, during the last Eurogroup to Amsterdam, I realized that the Greek Minister of Finance had agreed in principle on this package of additional measures. The only debate is how to apply this idea.




Is there not a risk to revive speculation about the “Grexit”?

negotiations with Greece are still very sensitive and agitated. Once we have found a way to implement this package of measures “backup”, we can begin discussions on the debt. Many people said that discuss debt was impossible, too politically sensitive, but we will! All Eurogroup ministers said they agreed to negotiate on this.




You push for reform of the Pact for Stability and Growth. Why?

A Pact reform is necessary because we all have problems with the existing indicators that judge the performance of a country, in particular with the structural deficit. It is a difficult indicator to predict, difficult to manage and difficult to explain. Recently, we had a budget discussion in the Netherlands and I had to explain to my Prime Minister and party leaders how this structural deficit indicator work. It took me a long time. One of my frustrations is that this indicator goes up and down without my knowing really why. I suggested that we focus our attention more in the future about spending a reference indicator ( ‘expenditure benchmark “). This is to link changes in the level of expenditure of states to their economic activity. It’s a simple rule to explain and apply. Many countries support this idea, and the Commission should make proposals. Furthermore, should the Commission to review the way it calculates the output gap between the level of real GDP and the potential GDP, based on a period of four years rather than two years as at present.




Are Are there other projects to be undertaken to make governance more readable euro zone?

I also grows – but it will require more discussion – the fact connects much what is done in Brussels which decided politically in capitals. Ideally, I would like once a government is newly elected, he works with the European Commission on a plan for his term (4 to 5 years depending on the country). It would be the responsibility of the new government to set fiscal targets and structural reforms. The Commission would then assess the plan and then check each year its implementation, with possible sanctions if the trajectory deviates.




You want the European Union make mandatory its recommendations economic policy?

I do not want the European Union to say how to carry out a pension reform and labor market. But I note that today we have two different worlds, with one hand the economic policy agenda of governments and the other recommendations made each year by the European Commission. These are very few occasions by states. It is necessary that these two worlds come together and work better together. This should help correct a defect of the fiscal approach of the Commission, which is too focused on the short term and that results in quarterly admonitions to States to fulfill their goals.

do you support the monetary policy of Mario Draghi?

I can not answer this question not to interfere with the independence of the ECB. But I can say that the Central Bank took its decisions in a very difficult period with a low interest rate environment. The low rates have not been caused by the ECB but by demographic, economic and political. Let this discussion that has no place: the ECB acts within its mandate. For some countries, this is perhaps not appropriate but the ECB takes decisions for the entire eurozone.

.



Renaud Honoré

LikeTweet

No comments:

Post a Comment