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Due to the new coronavirus (COVID-19), the European Union (EU) recommended the suspension and non-implementation until 2023 of financial rules limiting public spending of member countries.
The EU Commission has published a paper containing financial policy recommendations that can be applied to member countries in the pandemic period.
This paper states that the various financial support provided to the economies of member countries should not be cut off early and should continue in 2021 and 2022.
The paper also draws attention to the support to be timely, temporary and objective focused, and requires that these be continuous and focused on economic recovery. It is further reported that in the crisis situation caused by the pandemic it is necessary in the financial rules to show flexibility to protect economies and employment, as well as to incur additional costs in areas such as health.
In the paper, which highlights the importance of phasing out financial measures after reducing health risks, it is recommended to extend until 2023 the decision to suspend financial rules that limit member states’ public spending. Member states are expected to make a formal decision on the issue in May.
EU financial rules
According to EU rules, under normal circumstances the budget deficit of member countries should not exceed 3 percent of Gross Domestic Product (GDP) and public debt should not exceed 60 percent of GDP. When this limit is exceeded, it is necessary to inform the EU Commission of the measures to be taken and for an effective fight to be carried out. On the contrary, a disciplinary process called “extreme open procedure” can be applied to the country in question. At the end of the disciplinary process against the country in question may be economic sanctions.
EU member states, due to the pandemic, last year decided to suspend the rules in question and increased public spending to levels beyond the borders./AA
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