BRUSSELS (MNI) – Finance ministers aren’t making fast enough
progress towards tightening up the bloc’s financial rules, Swedish
finance minister Anders Borg said on Tuesday.

“We need sanctions and we need to make more rapid progress,” Borg
told reporters on his way into a meeting of finance ministers from the
EU’s 27 countries on Tuesday morning.

European Council President Herman Van Rompuy is leading a task
force which will suggest ways to increase adherence to the bloc’s
financial rules in the aftermath of the financial crisis. He is due to
make an interim report next week, followed by a full report in October.

But the task force, which met for the fourth time late Monday and
will make an interim report next week, doesn’t seem to be getting very
far.

After the meeting on Monday, Van Rompuy released a short statement
saying the ministers had an “in-depth discussion on national fiscal
frameworks, macro-economic surveillance and sanctions” and that work
would be continued.

The European Commission, which will make its own report on
bolstering governance at the end of September, wants to make sanctions
semi-automatic, so that they come into force without a vote. But those
plans are likely to displease ministers worried about their sovereignty.

Belgian finance minister Didier Reynders told reporters that the
task force had made “some progress” on sanctions while Spanish finance
minister Elena Salgado said some parties had concerns about the legality
of imposing sanctions on European Union member states that weren’t part
of the 16-country Eurozone.

“You have to be patient,” German finance minister Wolfgang
Schaeuble said as he left Monday night’s meeting. “The main concern is
that the basis for sanctions should be improved,” he added.

The European Commission’s rules – as set out in the Stability and
Growth Pact – stipulate that each country must limit its annual budget
deficit to 3% of its GDP and its total debt to 60%. The European
Commission is in charge of enforcing those limits but doesn’t have the
political clout or instruments to do so effectively.

Blatant flouting of the rules by some countries led to a sovereign
debt crisis in May this year, as investors worried that some countries
had run up such large debts that they ran the risk of defaulting.

–Brussels: 0032 487 (0) 32 803 665, echarlton@marketnews.com

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