Parliament Committee Passes EU Fiscal Treaty
Parliament's committee on European affairs approved the European Union's new fiscal treaty draft, which would instate more stringent penalties for violations of budget deficit and public debt ceilings.
The treaty, slated for ratification in July, would only allow Eurozone countries that have signed onto the terms to receive bailout aid. European leaders plan to sign the fiscal agreement at a session in March. If passed, the legislation will return to the Estonian Parliament for ratification.
As established by the Growth and Stability Pact, first adopted in 1997, member states' budget deficits cannot exceed 3 percent of GDP, and public debt can't exceed 60 percent of GDP.
A central element of the new treaty is the rule that, in addition to the 3 percent limit, structural deficit cannot exceed 0.5 percent of GDP.
For 2012, the Estonian government passed a budget with a 2.1 percent deficit, and opted for higher spending, against the advice of the central bank, which may result in breaking the 3 percent deficit limit if the growth rate does not exceed the bank's most pessimistic estimate. But MP Taavi Rõivas, who chairs the EU affairs committee, said the rules would not provide difficulties for Estonia in the future, whereas Prime Minister Ansip has not ruled out the option of mid-term spending cuts in the 2012 budget.
Ott Tammik