EP Budgets Committee Chair: ‘EU debt goes against treaties’

[ffsa.fr/Flickr]

Jean Arthuis believes EU debt from 2014 should be dealt with in the 2015 budget. [ffsa.fr/Flickr]

As member states present their 2015 budgets to the European Commission for examination, serious questions are being raised over the alarming state of the EU budget. President of the European Parliamentary Committee on Budgets Jean Arthuis says the Union’s debts will reach €30 billion by the end of 2014.

President of the Committee on Budgets in the European Parliament, and French Minister for the Economy and Finances from 1995 to 1997 Jean Arthuis is an MEP from the liberal ALDE group.  He was interviewed by EURACTIV France.

The EU’s financial difficulties are a result of debts that have accumulated over several years. The European Parliament is due to adopt the EU budget for 2015 at the plenary session in Strasbourg on 22 October, so what is the current situation?

The European Union is still generating debt, which goes against the treaties. When the Council and the European Parliament set budgetary commitments, they must have accepted that one day they will have to honour those commitments.

The real issue is that we are creating a “snowball effect” of accumulated debt, to the point where the EU’s debts were worth €11 billion at the end of 2011, 16 billion at the end of 2012, 23 billion at the end of 2013, and could reach €30 billion by the end of 2014. The debts just keep on growing. We have to put an end to this.

How can such an accumulation of unpaid bills exist when the treaties formally prohibit the EU from generating debt? Does this mean there are structural problems in the way the European Union’s budget is established?

The multiannual financial framework, which has scheduled the EU’s spending for 2014-2020, was adopted despite a €52 billion discrepancy between spending commitments and payments. €960 billion of commitment authorisations were scheduled, compared to only €908 billion of payment appropriations, which means that some bills will have to be deferred.

€220 billion is still awaiting validation from 2013.  This situation must be rectified.

What can be done to limit the accumulation of debt?

To face up to the 2014 situation, the European Commission is planning to increase payment appropriations by €4 billion. This was approved by the EP’s Committee on Budgets and will be put to the vote in the plenary on 22 October.

As far as the 2015 budget is concerned, the plan is to re-establish the level of payment appropriations initially proposed by the European Commission.

I think it is important to deal with the unpaid bills from 2014 at the same time as the budget for 2015, but to prioritise 2014 in order to stabilise the debt.

Does the EU’s budgetary situation not clash with its demands on member states to make serious efforts to keep public deficits and debt at acceptable levels?

It raises questions over the authority of Europe. It is the member states that will have to honour this debt. We have a conciliation week between 6 and 14 November, the central aim of which will be to ask member states for more funds. We will see how that goes.

For us, tackling the debt problem is the main issue, but considering the state of the budget in some member states, we shall have to wait and see.

Jean-Claude Juncker, the new president of the European Commission, has announced a huge investment plan of €300 billion to boost economic growth in Europe. How will the EU mobilise this money in the current economic climate?

The big question is how Jean-Claude Juncker will bring €300 billion euro investment plan to fruition. We do not think this money will be recycled from elsewhere; it will probably take the form of private savings mobilised via Project Bonds.

But how will this be possible when budgets are so restricted? The future Vice-President of the European Commission for the Budget, Kristalina Georgieva, was unable to answer this question at her parliamentary hearing, as she did not have a detailed knowledge of the investment plan.

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