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Euro-zone ministers split over fiscal pact reform
www.chinaview.cn 2005-03-08 08:25:58

     BRUSSELS, March 7 (Xinhuanet) -- Finance ministers from the Euro-zone countries were on Monday night split over plans to weaken the European Union (EU)'s fiscal rules, which were designed to underpin the single currency.

    The new draft of a revamped Stability and Growth Pact contains a clause allowing Germany to cite the costs of German reunification after 1989 to avoid sanctions under the pact.

    The Luxembourg EU presidency also proposed a raft of other measures to help countries avoid penalties when they breach the pact's budget deficit ceiling of 3 percent of gross domestic product (GDP).

    Mitigating factors could include higher research spending, higher general investment spending, pensions and health reform and lower-than-expected growth.

    Luxembourg's Premier and Prime Minister Jean-Claude Juncker hoped the draft would provide the basis for a deal on a re-modeled pact at the EU summit in Brussels on March 22-23.

    But it became clear that wide differences remained among EU member states. The most contentious part of the package is the list of relevant factors that countries could invoke to plead for clemency.

    The 12 euro zone ministers will be joined on Tuesday by colleagues from the 13 other EU countries. But EU officials warned that a deal would also be unlikely.

    It is expected that a special finance ministers' meeting on March 20 would be arranged to break the deadlock, but the final say lies with EU heads of government.

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