In the perspective of the State of the Union announcements made by the European Commission every year, in September, Victor Negrescu, as a member of the European Parliament, responsible for the annual European budget for the S&D Group in the European Parliament and also as the S&D Coordinator in the Committee on Budgetary Control, is calling upon the European Commission to evaluate the possibility to temporarily amend the European fiscal rules and the excessive deficit procedure by extracting from the calculation the specific amounts being spent for logistical, military and humanitarian aid to Ukraine and the Republic of Moldova.
In a letter to the European Commission President Ursula von der Leyen, the S&D MEP recalls that the frontline countries have demonstrated that, in the face of danger, they were capable of doing important actions to help Ukraine and the Republic of Moldova, and as such protecting the European way of life. However, in order to face this severe challenge, many of the frontline countries have allocated significant resources and have spent important amounts from their own budgets in providing the logistic, humanitarian and military aid that Ukraine needs.
”This has generated additional unforeseen costs and expenses, and has put a great burden on their national budgets. Sometimes, these financial indispensable costs have been done at the expense of other crucial policies affecting directly the democratic and social resilience of those countries. Therefore, complying with the current European fiscal rules, related to the 3% of GDP deficit rate and 60% of the GDP debt, has become increasingly difficult and socially challenging, especially in a post-COVID era and with the current high inflation rates”, Victor Negrescu explains.
The MEP also highlights this decision as a solution to increase aid to Ukraine and the Republic of Moldova, by providing more fiscal space to cover the costs of logistical, military and humanitarian aid.
Last but not least, Victor Negrescu suggested including this topic in the European Commission President’s announcements for the annual State of the Union debate in September.
”EU Member States have shown great solidarity with Ukraine and the Republic of Moldova, providing support, humanitarian and military aid in an extensive and comprehensive way to our Ukrainian and Moldavian friends. It is proof that we can do so many things together if we stay united and understand that we need to help each other in difficult times”, adds the Social Democrat MEP in his letter to the head of the European executive.
Victor Negrescu also mentioned to integrate the proposal as an amendment to next year’s EU budget.
According to an analysis conducted by the European Commission, the costs per member state related to aiding Ukraine and the Republic of Moldova in the context of the Russian invasion range on average between 0.5 and 1.5% of direct costs in the GDP.
MEP Victor Negrescu initiated similar actions, succeeding in mobilising the support of the European Commission and bringing about the swift adoption of the temporary protection framework for refugees from Ukraine and the relaxation of EU regulations on the 2014-2020 long-term budget.
Speaking later in the studio of PS News’ “Puterea Știrilor”, he said he expected “a positive response”. “The reason why I have launched this letter now is that the European Commission is currently working on its agenda for next year,” Negrescu said.
The MEP also discussed the issue in advance with representatives of other member states and European Commission representatives.
“There is positive feedback, because it is obvious to everyone that this is a long-term effort and this should not be a fiscal burden for Member States. According to the European Commission’s assessments, Member States allocate between 0.5 and 1.5% of their gross domestic product for direct expenditure on support to Ukraine and Moldova (…). So, in practice, there would be a possible budgetary surplus for the Member States if this decision were made”, added the Social Democrat representative in the European Parliament.
The European Commission has already set a precedent in this regard during the pandemic, when it allowed a temporary derogation from the fiscal rules of the Stability and Growth Pact, and it could do the same in this regard, because “in the past, at least the President of the European Commission said that this effort must continue and I expect her to include this initiative in the approaches she promotes at European level”, Negrescu added.
This is a difficult context for all Member States, the MEP believes, saying that post-pandemic, Member States have had to invest extra in restarting their national economies.
“We are also talking about co-financing European-funded projects or those funded by the national recovery and resilience plan. We’re basically talking about a global economic reset. The whole global economic flows have changed, we see now the tensions with China, and we see the impact of the war in Ukraine. So we are obviously talking about a different context, a context marked by high inflation. Many countries are facing similar problems. The difference between Romania and other countries is that, unfortunately, in our case, we entered into this excessive deficit procedure at the end of 2019, when the government at the end of the year made some unnecessary spending and then we got into this more difficult situation compared to other countries”, explained the MEP.
In conclusion, Victor Negrescu said that there are many member states that have a deficit of over 3% and are facing similar problems, so the flexibility he called for “would allow everyone to get through this period, continuing the effort they are making to support Ukraine”, not just Romania.
Romania made a commitment at the European level to reduce its budget deficit from 5.7% of GDP in 2022 to 4.4% in 2023 and below 3% in 2024. But this year, after only 5 months, the deficit reached 2.32% of GDP (up from 1.48%), raising the possibility of ending 2023 with a deficit towards 7%, much higher than last year.
The rules of the Stability Pact are suspended until December, and the Commission announced back in the spring that member countries must prepare credible plans for gradually reducing the deficit starting this year. Unlike in previous years, the EU executive has decided to make access to EU funds conditional on a return to “budgetary normality”.
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