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The European Commission has issued a warning to eight countries that do not comply with budgetary commitments. Governments should draw up a budget for 2017 so as to reduce the deficit to 3% of GDP (for some, the limit is 2.5% of GDP), while retaining the national debt at a level not higher than 60%. If they do not fulfill these conditions, they may be fined in the amount of 0.2% of GDP.
Italy
According to European Commission’s forecasts, in 2017 the Italian budget deficit will amount to 2.4% of GDP, and this value will increase to 2.5% by 2018. At the same time, the Italian national debt is now above 130% of GDP. Italy’s economic indicators are much worse than those expected by the Government. Rome earlier calculated that the deficit woul be reduced to 1.9% of GDP in 2017.
The situation is complicated by the ongoing banking crisis. Total amount of debt of Italian banks has already reached € 360 billion.
Spain
Spain is one of the major violators of budgetary discipline in European Union. In 2014-2015, the government has already been blamed for excessive budget deficit. Spain's national debt reached 100.9% of GDP, or € 1,107 bln.
Poor economic figures originate from crisis of 2008-2009, when Spain's budget deficit reached 11% of GDP. The government had to reduce this figure to 4.2% in 2015, but real results were 5.1%.
If Spain's budget deficit fails to reach a satisfactory performance in the coming year, the country may be fined up to € 2.16 Bln.
Portugal
In 2008-2009, Portugal also suffered a severe crisis. By 2010, the country's budget deficit rose to 11.2% of GDP. The European Commission ordered the Spanish government to reduce this figure to 2.5% by 2015.
However, even after successful structural changes, the deficit was reduced only to 4.4%. Level of public debt, which in 2014 amounted to 130% of GDP, decreased to 129% for the year. If Portugal does not reduce the budget deficit, penalty for the country may amount to € 359 million.
Finland
At the moment, Finland’s budget deficit is 2.4% of GDP. According to European Commission’s forecasts, this figure will increase to 2.5% in 2017. The growth rate of the economy is also slow, only 0.8%.
Slowdown of economic development is obliged to fall in exports in 2012-2014, which was caused by collapse of Nokia and paper industry, as well as partial loss of the Russian market, which accounted for most of the exports in 2013 (about 13.9%). As a result, public debt increased to 57.0% of GDP.
Cyprus
The 2013 crisis, when the country's banking system was in a critical condition, was an ordeal for economy of Cyprus. Write-off of Greek bonds hit two of the country's largest bank - Cyprus Popular Bank (Laiki) and Bank of Cyprus. Public debt rose to 111.7% of GDP. The government stabilized the situation with help of € 10 billion.
Now, Cyprus is gradually getting over crisis. In 2016, the economy grew by 6about 3%. At the same time, the budget deficit amounted to 1% of GDP.
Lithuania
Lithuania’s indicators are of less concern in the European Commission. According to the Ministry of Finance of Lithuania, budget for 2017 implies deficit of 0.8% of GDP.
Lithuania's economy was heavily affected by decrease in exports to Russia. In 2013, the public debt rose to 39.4% of GDP. Now, the government is trying to find new markets to improve the financial situation of the country. Cooperation with the USA and China is among the priority areas.
Belgium
Belgium has been hit hard by the crisis of 2009, when the budget deficit rose to a record 5.4%. Volume of the Belgian public debt increased to 96.2% in 2009.
Now, Belgium is gradually recovering, but the economic indicators still have not reached desired level. In 2015, the Belgian budget deficit amounted to 2.6% of GDP.
Slovenia
Budget deficit in 2015 rose to 2.9% of GDP. Poor economic performance in 2013 was reflected in the banking crisis. Public debt for this period amounted to 71.7% of GDP.
To resolve the situation, State Bank Assets Management Company took over most of bad loans of small banks.
source: bbc.com, reuters.com
Italy
According to European Commission’s forecasts, in 2017 the Italian budget deficit will amount to 2.4% of GDP, and this value will increase to 2.5% by 2018. At the same time, the Italian national debt is now above 130% of GDP. Italy’s economic indicators are much worse than those expected by the Government. Rome earlier calculated that the deficit woul be reduced to 1.9% of GDP in 2017.
The situation is complicated by the ongoing banking crisis. Total amount of debt of Italian banks has already reached € 360 billion.
Spain
Spain is one of the major violators of budgetary discipline in European Union. In 2014-2015, the government has already been blamed for excessive budget deficit. Spain's national debt reached 100.9% of GDP, or € 1,107 bln.
Poor economic figures originate from crisis of 2008-2009, when Spain's budget deficit reached 11% of GDP. The government had to reduce this figure to 4.2% in 2015, but real results were 5.1%.
If Spain's budget deficit fails to reach a satisfactory performance in the coming year, the country may be fined up to € 2.16 Bln.
Portugal
In 2008-2009, Portugal also suffered a severe crisis. By 2010, the country's budget deficit rose to 11.2% of GDP. The European Commission ordered the Spanish government to reduce this figure to 2.5% by 2015.
However, even after successful structural changes, the deficit was reduced only to 4.4%. Level of public debt, which in 2014 amounted to 130% of GDP, decreased to 129% for the year. If Portugal does not reduce the budget deficit, penalty for the country may amount to € 359 million.
Finland
At the moment, Finland’s budget deficit is 2.4% of GDP. According to European Commission’s forecasts, this figure will increase to 2.5% in 2017. The growth rate of the economy is also slow, only 0.8%.
Slowdown of economic development is obliged to fall in exports in 2012-2014, which was caused by collapse of Nokia and paper industry, as well as partial loss of the Russian market, which accounted for most of the exports in 2013 (about 13.9%). As a result, public debt increased to 57.0% of GDP.
Cyprus
The 2013 crisis, when the country's banking system was in a critical condition, was an ordeal for economy of Cyprus. Write-off of Greek bonds hit two of the country's largest bank - Cyprus Popular Bank (Laiki) and Bank of Cyprus. Public debt rose to 111.7% of GDP. The government stabilized the situation with help of € 10 billion.
Now, Cyprus is gradually getting over crisis. In 2016, the economy grew by 6about 3%. At the same time, the budget deficit amounted to 1% of GDP.
Lithuania
Lithuania’s indicators are of less concern in the European Commission. According to the Ministry of Finance of Lithuania, budget for 2017 implies deficit of 0.8% of GDP.
Lithuania's economy was heavily affected by decrease in exports to Russia. In 2013, the public debt rose to 39.4% of GDP. Now, the government is trying to find new markets to improve the financial situation of the country. Cooperation with the USA and China is among the priority areas.
Belgium
Belgium has been hit hard by the crisis of 2009, when the budget deficit rose to a record 5.4%. Volume of the Belgian public debt increased to 96.2% in 2009.
Now, Belgium is gradually recovering, but the economic indicators still have not reached desired level. In 2015, the Belgian budget deficit amounted to 2.6% of GDP.
Slovenia
Budget deficit in 2015 rose to 2.9% of GDP. Poor economic performance in 2013 was reflected in the banking crisis. Public debt for this period amounted to 71.7% of GDP.
To resolve the situation, State Bank Assets Management Company took over most of bad loans of small banks.
source: bbc.com, reuters.com
