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EU commissioner warns against budget deficits
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08:12, February 17, 2009

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European Union (EU) member states should rein in their swelling budget deficits in the medium and long term after they injected billions of euros into their stimulus packages, a top EU economic official said on Monday.

While only the public sector could provide the necessary fiscal stimulus, "we need to be vigilant not to threaten the medium and long term sustainability of public finances," Joaquin Almunia, EU commissioner for Economic and Monetary Affairs, told the European Parliament in Brussels.

He stressed that action to stimulate the economy should be "targeted, timely and temporary."

Upon arriving at the European Parliament, Almunia warned that the European Commission would soon take actions against those EU countries whose budget deficits have run too high.

"The rules were established for everybody and must be respected," he told reporters.

"What they say as far as budget discipline is concerned is clear: in the case where countries have recorded or plan deficits above the 3 percent barrier, we must launch procedures established in the (EU) treaty," he said.

"This is what we are going to discuss on Wednesday," Almunia added.

The European Commission, the EU's executive body, is scheduled on Wednesday to assess budgetary position of several member states, including Germany, France, Britain, Spain and the Netherlands.

The EU's Stability and Growth Pact requires member states to keep their budget deficits below 3 percent of their respective Gross Domestic Product (GDP).

After spending massive money in financial bailouts and economic stimulus, many EU countries have said their budget deficits were projected to go beyond the 3-percent ceiling.

Draft documents to be discussed by the commission two days later showed that the EU's executive body will launch disciplinary measures against France, Spain and Greece for exceeding the 3-percent ceiling, media reports said.

Analysts warned that with budget deficits piling up, EU countries would find it more difficult to raise money on the financial markets to fund their economic stimulus packages.

Source: Xinhua

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