FRANKFURT (MNI) – Eurozone government reforms will take time,
European Central Bank President Mario Draghi said in testimony Monday to
the European Parliament, adding that an over-emphasis on raising taxes
could also be a reason why markets have not yet rewarded the actions of
some governments.
Draghi said “we have started” the process of turning words into
actions on reform efforts, but he warned that such efforts would take
time.
Draghi said markets have not necessarily rewarded government
actions because “these reforms have just started, after many years” of
poor policies in many countries.
“This burst of action has been recent,” Draghi said. But he said
“many governments belonging to the European Monetary Union have started
in their reforms effort.”
Draghi also suggested that a reason why many peripheral countries
were facing tough recessions was because of an over-emphasis on the
“easy” route of raising taxes instead of cutting government
expenditures.
“This is the reason some countries are not seeing the benefits,”
Draghi said. “Fiscal consolidation will have to be in a sense
requalified” in the future – focused more on cutting spending and less
on hiking taxes.
— Frankfurt bureau: +49 69 720 142; email: ccermak@marketnews.com
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