European SDG Summit 2021: For Climate Action & a Just Transition – Registrations Open
23 September 2021
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GRTU's Director General Vince Farrugia is one of the five Maltese members at EESC and one of two representing employers. Under the Lisbon Treaty the European Parliament and the EESC are to appoint rapporteurs on important Commission communications. Mr Farrugia has yesterday seen adopted during the 471st EESC plenary session his first Opinion entrusted to him by the EESC as rapporteur, assisted by Dr Gordon Cordina as expert to the rapporteur. The Opinion was drafted on the European Commission proposal for a regulation on the effective enforcement of budgetary surveillance in the euro area. The paper was voted with a stunning 139 votes in favour, 33 abstentions and 10 against.
Fiscal discipline is essential for long term economic growth but is often jeopardized by short-term considerations, which have recently been heightened by the need to counteract the recession. This represents a considerable threat to the eurozone, particularly due to asymmetric effects on the fiscal sustainability of different Member States and raises further questions regarding the suitability of the Stability and Growth Pact as an instrument of economic convergence.
The European Council in December 2010 proposed an amendment to the Treaty to establish a permanent mechanism to safeguard the stability and economic governance of the euro area by end June 2011. This is to be commended as it would contribute to the gradual restoration of credibility in the euro area. There however remains much work to be done in terms of the practical dimensions of the implementation of these conclusions.
The Commission's proposal on Budgetary Surveillance is part of a legislative package containing the most comprehensive reinforcement of economic governance in the EU and the euro area since the launch of the Economic and Monetary Union. The recently agreed "European semester" will integrate all revised and new surveillance processes into a comprehensive and effective economic policy framework.
The Farrugia Opinion made the following key conclusions and recommendations:
Fiscal rules should take into consideration the issue of quality of Government expenditure
Stronger emphasis is placed on the preventive rather than the corrective arm
Better performing countries would be called to make fiscal consolidation efforts in a manner consistent with their relative size in the monetary area so as to compensate for slower performing ones
The nature and extent of penalties undertaken under the corrective arm are in each case decided and implemented on the basis of a rigorous impact assessment
The Sustainability and Growth Pact is reformed in a manner which provides incentives towards fiscal policy sustainability
Interest on deposits and fines can be claimed back by the MS concerned provided fiscal consolidation is proven
Reform to the budgetary surveillance will result in the development of a mechanism which will serve as the cornerstone in strengthening EU governance and restoring credibility in the euro area
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