Crack down on eurozone budget laggards, urge IMF economists

An International Monetary Fund working paper has said enforcement of eurozone budget rules is too lax, just one week after Finance Minister Edward Scicluna told MEPs he favoured a more "flexible" approach to applying them.In a paper published yesterday, three IMF economists argued that the EU's budget deficit rules lack effective punitive measures, noting "a poor record of compliance" with key rules across the eurozone. The IMF report urges the EU to adopt a "carrot and stick" approach, with more tangible benefits for countries which stick to budget targets and "more credible sanctions" for those which don't. Report writers went on to note that "distorted political incentives" are contributing to the eurozone's fiscal woes and that existing budgetary rules have not managed to eliminate member states' fiscal biases, from running up large deficits to procyclical policies, whereby governments are big spenders during good times and tighten belts when times are tough. The IMF's calls for stricter observance of EU budgetary rules runs counter to views expressed by Prof. Scicluna, sitting ECOFIN president, who last week told MEPs that he felt the EU needed to ensure a degree of...

from timesofmalta.com http://ift.tt/2kQIH7j
via IFTTT