Commission foresees fiscal sustainability of new EU members

Two new Commission studies state that low
starting debt levels and expected high GDP growth constitute
favourable conditions for the future EU members’ medium-term
fiscal sustainability.

The studies, prepared by the European Commission's
Directorate General of Economic and Financial Affairs,
develop a set of government debt projections that rely upon
the deficit and debt data reported in April 2003 and the
fiscal plans presented in the 2002 Pre-Accession Economic
Programmes.

The Commission argues that successfully
catching up will require public spending in view of
financing sufficient levels of public investment, the costs
of applying the EU's body of laws and co-financing EU
funds, as well as the financial burden stemming from the
remaining reform agenda in the case of transition
economies. The Commission adds that a small deficit can be
compatible with favourable debt dynamics for a majority of
future Member States, but nevertheless calls for "a certain
degree of fiscal prudence no matter how positive the
projected evolution of the debt ratio may appear".

 

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