BRUSSELS (MNI) – The Eurozone has some very serious problems
enforcing budgetary discipline and that needs to be improved, European
Central Bank President Jean-Claude Trichet said in a newspaper interview
published Monday.
“We have some very serious problems and we need to draw some
serious lessons,” Trichet told French daily Le Monde. “The supervision
of fiscal policies, of developments in competitiveness in the euro area
economies and of structural reforms needs to be radically improved.”
A transcript of the interview was provided by the ECB.
Trichet said he supported European Commission plans for closer
budgetary surveillance at the European level and more penalties for
countries that violate the rules.
The current rules stipulate that each European Union member must
keep its annual budget deficits below 3% of gross domestic product and
its outstanding public debt below 60%.
“I support the Commission’s proposal, which I consider to be
perfectly aligned with the goal of improving governance in the euro
area,” Trichet said. “I have noticed some negative reactions, in
particular in France, and I don’t understand this, especially in a
country that has a tradition of favouring a strong ‘economic
governance’,” he said.
“Close multilateral surveillance, which is fundamental in the
spirit and the letter of the Stability and Growth Pact, has been
terribly neglected,” Trichet said.
Asked about a “Plan B” for Greece, should the current E110 billion
bail out package prove insufficient, Trichet said, “that is not part of
our working assumption. Greece must and will honour its commitments.”
“The European Commission, together with the ECB on the one hand and
the IMF on the other, is following developments in the [Greek] recovery
programme very closely,” Trichet said. He added that debt restructuring
by Greece should not be anticipated.
–Brussels: 0032 487 (0) 32 803 665, echarlton@marketnews.com
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