IMF: euro zone should embark on structural reforms
The International Monetary Fund (IMF) has blamed Germany, Italy and France for not adhering to the euro zone fiscal rules, because they failed to reduce their structural deficits when there was an economic boom.
The EU's Stability and Growth Pact, which underpins the euro currency, puts a deficit ceiling for countries of three percent of GDP, but it has already been breached by the EU's two largest economies - France and Germany.
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In its annual assessment of the euro zone economy, the IMF stressed that the euro zone should embark on "more sustained and vigorous structural reforms", starting with the job market and pensions, to aid economic recovery.
It also said that euro zone growth in 2003 is likely to be about 0.5 percent - less than half its forecast earlier in the year.
This confirms the European Commission's economic forecast for this year, which had to be revised in light of the economic difficulties that Member States, such as Germany, are still facing.
The IMF also said that countries should be allowed to breach the three percent limit, if they are undertaking credible long term actions to strengthen their underlying budgetary position.