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| Photo Credit: depositphotos.com |
Eurozone finance ministers have decided to start sanctions
procedures against Spain and Portugal for breaching EU spending rules,
reports AFP. Both countries are accused of not making
“sufficient effort”
to cut their budget deficits which, according to EU fiscal rules,
should be no more than three percent of GDP. The criterion was
introduced ahead of the euro launch in 1999 and so far no country has
been penalized for breaking them. Sanctions could be a fine of up
to 0.2 percent of a country's GDP and the suspension of commitments or
payments from EU structural funds of up to 0.5 percent. Spain was
asked by Brussels to lower the deficit to 4.2 percent of GDP in 2015,
from 5.9 percent in 2014, but Madrid ended up with a 5.1 percent
shortfall instead. Lisbon's shortfall was 4.4 percent last year, a drop from 7.2 percent in 2014 and from almost 10 percent in 2010. French Finance Minister Michel Sapin told reporters that Portugal
“does not deserve excessive discipline.” He praised the efforts the country has made in recent years. Spanish minister Luis de Guindos said sanctions would be
"sheer nonsense". A decision should come
"as soon as possible" in order to give
"clarity and certainty",
said Eurogroup President Jeroen Dijsselbloem. He and EU finance
commissioner Pierre Moscovici added that the rules would be applied
"intelligently.”"It’s a possibility to have zero sanctions," said Dijsselbloem. Once
the decision is made, the Commission will have 20 days to prepare
penalties. If the eurozone ministers approve sanctions Spain and
Portugal will have 10 days to explain their position and to appeal for
clemency. Both countries are members of the eurozone and have very high
unemployment rates which at the end of 2015 reached 22.1 percent in
Spain and 12.6 percent in Portugal. In 2012, Spain received
billions of dollars from the European Union to rescue its banking
system. The Spanish government then undertook a tough policy of fiscal
austerity, prompting popular protests. Portugal received a loan
package from the Eurozone countries in 2011. The European Central Bank
(ECB) and the IMF allocated €78 billion to support the country. In
return, Lisbon lowered the salaries of state employees, cut social
benefits and increased taxes.
RT Photo
