The European Commission is preparing a proposal to update the Stability and Growth Pact, resulting in bilateral debt reduction agreements between the European Union and individual member states, APA reports citing Financial Times`.
The reform will aim to simplify the bloc's fiscal rules and give more agency to individual states, but also strengthen enforcement mechanisms, sources said.
According to unnamed EU officials, member states would be given four- or five-year proposals to steer their debt onto a "credible, downward trajectory." States could provide a counter-plan lasting six to eight years, "which would need to be justified by the need for investments in key priority areas such as green energy or defense." Upon reaching a deal with the EU, member states would commit to structural reforms, as well as yearly progress checks with the possibility of penalties in case of non-compliance, the report stated.
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