Azernews.Az

Germany signaled support for giving France and Italy time to show they are respecting deficit targets while urging the two nations to press on with reforms.

The euro bloc’s finance ministers are meeting today in Brussels to weigh a response to the European Commission’s proposal to give those two countries, together with Belgium, until March to take additional measures to reduce their deficits and debt and make their economies more competitive.

“If the extra time is used to meet the rules, then that’s a good thing,” German Finance Minister Wolfgang Schaeuble told reporters before the meeting in Brussels. “What matters is that the time is used to move things in the right direction.”

The commission chose last month not to immediately punish countries whose budgets risk breaking rules. With the EU lowering its growth forecasts for the 18-nation bloc, unemployment at 11.5 percent and the European Central Bank considering more stimulus as inflation matches a five-year low, governments want more leeway on spending and taxes.

Austria, Spain, Portugal and Malta also drew up budgets that risk flouting targets, the commission said last month.

“The commission is firm in its judgments on what countries should have achieved,” Dutch Finance Minister Jeroen Dijsselbloem, who is leading the meeting, told reporters. “All options are open” if countries do not comply, he said.

Face Fines

Governments are required to narrow deficits to within 3 percent of gross domestic product and to reduce debt to no more than 60 percent of GDP. They can ultimately face fines of as much as 0.5 percent of GDP if they do not take effective action. The commission has power to sanction governments.

“We’re seeing that all countries have a difficult fiscal situation because of the economic crisis -- we don’t know yet what individual countries like France or Italy will propose,” Austrian Finance Minister Hans Joerg Schelling told reporters. “It was never about who would be punished or not, rather it was a fundamental question of whether the rules count for all or not.”

French Finance Minister Michel Sapin and his Italian counterpart Pier Carlo Padoan declined to comment on their way into the meeting.