V. Vasiliauskas: Apply more effective measures to ensure compliance with EU legislation
At today’s meeting, Vitas Vasiliauskas, Chairman of the Board of the Bank of Lithuania, will discuss with the International Monetary Fund’s (IMF) Chief of the European Department the economic development of euro area countries and the entire EU as well as the necessity to implement structural reforms. The Governor of Lithuania’s central bank attends biannual meetings at the IMF’s headquarters in Washington and discusses with the participants of this forum economic development in individual regions of interest to Lithuania.
‘While the level of economic growth is not high, it is, however, stable, which makes us feel positive. The major drags on economic development may have resulted from high uncertainty surrounding the EU political agenda: future presidential elections in France, Germany and the United Kingdom as well as unprecedented Brexit negotiations that are going to last for the next two years. There is also less optimism when assessing the fiscal situation of euro area countries,’ said Vasiliauskas and noted that most countries face difficulties in implementing agreed liabilities.
European Commission data suggests that, this year, the debt ratio of only a third of euro area countries is not over the tolerable 60 per cent of GDP established by EU legislation. Meanwhile, in five of them, the state debt exceeds GDP generated over a year. Out of 60 European Commission recommendations for euro area countries, only two were fully implemented. Only limited progress was made in implementing 30 more recommendations, while in implementing all other recommendations, the countries moved forward very little or did not implement the Commission’s recommendations at all.
‘I think, a precedent for application of real sanctions could encourage EU and euro area countries to be more responsible in meeting their liabilities,’ Vasiliauskas said. According to him, the fact that the European Commission has still never imposed real sanctions for neglecting legal acts that define EU economic governance does not encourage observing the rules. The European Commission usually only extends the term for the implementation of fiscal liabilities.
Vasiliauskas noted economic imbalances in individual countries – this year, such economic distortions were recorded by the European Commission in even 13 countries. Imbalances, showing the most vulnerable areas in the countries’ economies, in many countries are also adjusted unwillingly.
‘Unfortunately, in such cases, the excessive imbalances procedure, which is used for reducing economic distortions, could be applied; however, it has not yet been applied to any country either,’ noted the Governor of the Bank of Lithuania.
Vitas Vasiliauskas is a member of the Governing Board of the IMF and attends IMF meetings. During the present visit in Washington, Vasiliauskas attended meetings of the IMF International Monetary and Financial Committee, the Nordic-Baltic constituency, and the consultancy group G30. During talks with the IMF Mission Chiefs for Russia, Belarus and the euro area, he also discussed the economic development of individual regions in which Lithuania takes an interest.