“The medium-term fiscal-structural plans due in September 2024, should be underpinned by a clear fiscal strategy, growth- and resilience-enhancing structural reforms, and high-quality measures,” the IMF said.
The reprimand from the European Commission comes as France faces legislative elections and the prospect of a winner from either far-right or far-left parties — raising market concerns that there’ll be less effort to restrain public finances.
Meanwhile Italian Prime Minister Giorgia Meloni has made expensive promises to voters, including tax cuts on wages totalling about €10 billion (RM50.54 billion) that could complicate plans to bring public finances under control.
Both countries have high deficits and debt well above 100% of economic output. Other nations facing reprimand are Belgium, Hungary, Malta, Poland and Slovakia. Romania was already facing an EDP.
“It’s very important to ensure credibility for the new fiscal framework,” Finland’s Finance Minister Riikka Purra told journalists on Thursday before a meeting of her EU counterparts in Luxembourg.
The IMF also encouraged the EU to continue on the path of financial-market integration, to avoid dropping behind global peers and falling short of its ambitions for energy security, climate-change mitigation and the digital transition.
“Integrating fragmented national capital markets in a capital-markets union would help advance these goals by boosting finance for innovative long-term investment projects, increasing risk-sharing opportunities, enhancing the allocation of savings in the EU, and reaping EU-wide economies of scale in financial markets,” the report said. Furthering the banking union and ratifying the EU’s ESM backstop treaty should also “be given priority.”