Council Opinion of 15 March 1999 on the stability programme of Belgium, 1999 to 2002
C 124/4 EN Official Journal of the European Communities 5. 5. 1999 situation. An explicit programme period when growth is projected to have picked up. The recent ruling of the German Constitutional Court, requiring the indroduction of tax allowances for the children of married couples, constitutes a clear example of the existence of budgetary risk over and above those related to the commitment by the conjunctural such risks would be German government desirable in view of In addition, the Council considers that the German government should take any measures necessary to avoid a renewed increase in the government debt ratio and that it would be desirable to go beyond the 1 % deficit in 2002, particularly if economic growth is higher than expected. to counter the minimal position aimed for. level The Council notes that the successful implementation of the stability programme hinges on close coordination of actions at in all Germany to pay due regard to this callenge. levels of government; the authorities it encourges The Council notes that the programme envisages a restruc- turing of the budget in favour of government investment but intends to keep overall investment spending as a percentage of GDP unchaged at level. The Council encourages the German Government to give further attention jeopardising the budgetary to investment without, however, targets of the programme. current lowel its The Council welcomes the reform measures announced in the programme, in particular in the domains of the pension and health systems and in public administration, which are key to sustainable public finances and employment growth, but considers that they ough to be supported by further supply oriented policy measures. A determined implementation of the reforms, in combination with measures aimed at increasing the flexibility of product and labour markets, as recommended by the Broad Economic Policy Guidelines and envisaged in the German structural progress report for the Cardiff process, would be conducive to the achievement of the objectives of the stability programme. COUNCIL OPINION of 15 March 1999 on the stability programme of Belgium, 1999 to 2002 (1999/C 124/04) THE COUNCIL OF THE EUROPEAN UNION, the Council considers that the programme is consistent with the Broad Economic Policy Guidelines. Having regard to the Treaty establishing the European Community, Having regard to Council Regulation (EC) No 1466/97 of 7 July 1997 on the strengthening of the surveillance of budgetary positions and the surveillance and coordination of economic policies (1), and in particular Article 5(1) and (2) thereof, Having regard to the recommendation of the Commission, After consulting the Economic and Financial Committee, HAS DELIVERED THIS OPINION: On 15 March 1999, the Council examined the stability programme of Belgium, which covers the period 1999 to 2002. The Council notes that the programme aims at further reducing the general government deficit and debt as percent of GDP, by maintaining the pace of the fiscal consolidation effort pursued under the second convergence programme. Moreover, (1) OJ L 209, 2. 8. 1997, p. 1. that the budgetary projections of the The Council notes programme are based on a prudent macroeconomic scenario forecasting real GDP growth of 2,4 % for 1999 and 2,3 % per year, for the period 2000 to 2002. Under this scenario, the general government deficit is projected to fall to 0,3 % of GDP in 2002 and the debt ratio is expected to decline by about 11 percentage points between 1998 and 2002. The considerable improvement in the macroeconomic performance realised in Belgium in recent years, characterised by low inflation, declining interest rates, wage moderation and good export performance, suggests that the projected growth rates should be attainable. The Council commends the emphasis given in the programme on maintaining annual primary surpluses at 6 % of GDP as a central element of the strategy for budgetary consolidation and debt reduction; the achievement of high primary surpluses has been the anchor of budgetary policy in Belgium in recent years and their contribution to further in particular the steady decline in government debt, will remain decisive in the medium-term. The Council notes that the stability programme considers that no additional discretionary measures will be necessary to achieve this target, assuming that fiscal consolidation, 5. 5. 1999 EN Official Journal of the European Communities C 124/5 the measures of permanent nature already adopted will continue to provide a sufficient yield; this policy option seems credible to the Council. fluctuations. Therefore, The Council considers that the underlying budgetary position corresponding to a deficit of 0,3 % of GDP for the year 2002 is sufficient to provide a safety margin to prevent the deficit from breaching the 3 % of GDP threshold as a result of normal cyclical the budgetary medium-term the Belgian stability programme is in conformity target of with the requirements of the Stability and Growth Pact. However, fiscal consolidation in Belgium needs to be pursued beyond the horizon of the programme in order to ensure the continuation of the decline in the debt ratio and to respond to longer term issues in particular those stemming from the ageing of population. the The Council commends the affirmed determination of Belgian Government to adopt corrective measures in case any deviation from the norm set for the primary surplus should occur; it also notes that the stability programme defines a realistic rule for accelerating the deficit reduction in case of higher than expected growth. It urges the Belgian authorities to monitor the situation of public finance and take all necessary measures in order to ensure the achievement, at levels, of the objectives set in this area. federal and regional the planned fiscal The Council notes with satisfaction that consolidation effort will be accompanied by measures aimed at reducing the overall tax burden and labour costs, through the indexation of income tax brackets and the reduction in social security contributions paid by employers. However, the Council considers that efforts should be pursued in order to further alleviate the tax burden in Belgium. It also notes that the stability programme provides for a margin for an annual increase in real primary expenditure of 1,5 %. The Council acknowledges that increased resources to the current low level of government investment would enhance the potential of Belgian economy. It encourages the Belgian authorities to proceed further in introducing and implementing the necessary structural reforms in order to improve the functioning of labour and product markets and the quality of public expenditure. the allocation of The Council notes that the successful implementation of the stability programme hinges on the close coordination of actions at all it encourages the auth- orities in Belgium to continue their close cooperation to this end. levels of government; COUNCIL OPINION of 15 March 1999 on the stability programme of Luxembourg, 1999 to 2002 (1999/C 124/05) THE COUNCIL OF THE EUROPEAN UNION, Having regard to the Treaty establishing the European Community, Having regard to Council Regulaltion (EC) No 1466/97 of 7 July 1997 on the strengthening of the surveillance of budgetary positions and the surveillance and coordination of economic policies (1), and in particular Article 5(1) and (2) thereof, Having regard to the recommendation of the Commission, After consulting the Economic and Financial Committee, HAS DELIVERED THIS OPINION: On 15 March 1999, the Council examined the stability programme of the period the 1999-2002. The Council notes with satisfaction that government financial accounts will continue te be in surplus throughout the period covered by the programme, while the Luxembourg, which covers (1) OJ L 209, 2. 8. 1997, p. 1. government gross debt to GDP ratio will remain very low. The Council notes that, from a formal point of view, the stability programme is only partially in line with the agreed code of conduct on the content and format of stability and convergence programmes. The Council considers that the programme is consistent with the Broad Economic Policy Guidelines. as takes stability programme presents three macroeconomic The scenarios for the period 1999 to 2002. Under the central macroeconomic scenario, which for reasons of prudence the programme finance projections, real GDP growth is estimated at 3,4 % for 1999 rising to 3,7 %, on average, for the period 2000 to 2002. The least favourable scenario forecasts GDP growth of 2,8 % for 1999 and 3,0 % for the period 2000 to 2002, while growth under the most favourable scenario is projected to reach 4,0 % in 1999 and 4,5 % during 2000 to 2002. the public the basis for The Council considers that the macroeconomic framework presents, under the three alternative scenarios, a range of plausible assumptions for GDP growth, which are in line with the record of past performance and the long-term