BRDO, Slovenia (Reuters) – The possibility of exempting “green” investments from the calculation of the EU deficit will be part of the discussions when the EU’s fiscal rules are revised, the vice-president of the EU said on Saturday. European Commission Valdis Dombrovskis.
The idea of exempting investments that would help prevent climate change is to support the bloc’s ambition to reduce net CO2 emissions to zero by 2050. The exemption of investments in such projects has been dubbed by European officials the “golden rule”.
“Obviously, the question of a golden rule, one way or another, will be part of the discussion on the EU fiscal framework,” Dombrovskis told reporters after a second day of talks of EU finance ministers in the Slovenian town of Brdo.
During the two-day summit, finance ministers from the 27-nation bloc debated how to change fiscal rules to better adapt them to new economic realities once EU fiscal rules, now on hold. at the end of 2022, will be restored from 2023.
Some, like French Finance Minister Bruno le Maire, said the idea of the green exemption was worth discussing because it would help generate the very large funds needed to transform their economies over the next few years.
Others, like Austrian Finance Minister Gernot Bluemel, have expressed concern about how such a rule might work in practice, given the difficulty of precisely defining what constitutes a “green” investment.
“From an economic and scientific point of view, this can make sense,” he said.
“But I have seen many times in the past that such exceptions in budget practice – because the idea of a golden rule is not new – that this is often used as an excuse when the political will lack to obey the rules. And of course that shouldn’t be, “he said.
“Mechanisms must be built in to ensure that they are not misused,” he said.
The idea of an exemption for green investments was presented by the Bruegel think tank in a document commissioned by the ministers. The document also suggested that the EU’s requirement for governments to reduce public debt each year by one-twentieth of the surplus of more than 60% of GDP was too ambitious in a post-pandemic economy.
(Report by Jan Strupczewski and Michael Nienaber, edited by Ros Russell)
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