Council lifts German, Bulgarian deficit status
By Sarah Collins | Friday 22 June 2012
EU finance ministers confirmed, on 22 June, that Germany and Bulgaria are no longer under the bloc’s excessive deficit procedure, which places extra requirements on states to rein in spending. The two countries have reduced their deficits below the EU’s Stability and Growth Pact limit of 3% of GDP, ministers said, bringing the number of EU states in excessive deficit from 23 to 21.
Germany managed to slash its deficit from 4.3% of GDP in 2010 to 1% last year, two years ahead of a 2013 deadline. Bulgaria had a deficit of 3.1% of GDP in 2010 and has brought it down to 2.1% of GDP in 2011, on schedule.
UNFREEZES HUNGARY AID
Hungary, meanwhile, was told that it no longer faces the potential loss of €495 million in cohesion funding next year. The threat of an aid freeze was issued in January, making Hungary the first country in the EU’s history to face a funding freeze under new, stricter economic governance rules known as the ‘six pack’.
At the time, the Commission said that Hungary had brought its 2011 budget deficit below the EU’s 3% of GDP limit thanks only to a one-off transfer of pension assets from the private to the public sector, and was likely to see its deficit rise again in 2013 once the 2011 cuts wore off. After introducing further cuts, Hungary’s deficit is now predicted to be 2.7% of GDP next year. However, the country is still in the excessive deficit procedure, the Commission says. Hungary has never escaped the deficit procedure since it joined the EU in 2004.