Tuesday

13th Nov 2018

Refugee spending to be exempt from EU deficit rules

  • Countries along the migration route pledged to do more for refugees, and the costs could be exempt from EU deficit rules

EU budget deficit rules can be stretched for governments which spend money on refugees, European Commission president Jean-Claude Juncker said Tuesday (27 October).

Under EU rules, member states have to keep their budget deficits under 3 percent of GDP or face fines.

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But Juncker promised to take into the account spending associated with the refugee crisis,when checking if member states stick to the rules.

“We will be able to bear in mind the costs entailed by refugee policy, more than we have done up to now,” Juncker said in a speech to the European Parliament.

He added that there would be a country-by-country assessment.

“If a country makes a huge effort, there should be a commensurate understanding of what they have done,” he added.

“There will be a certain amount of flexibility in the Stability and Growth Pact”.

The EU’s Stability and Growth Pact is a set of fiscal rules which include the 3 percent red line.

The Commission president also said that if a country is unable to prove that it is affected by the costs of the refugee policy, it will not be eligible for the leeway.

Earlier this month, Austria’s finance minister cast doubt on whether countries struggling with the influx of refugees can stick to their budget plans.

"There are some countries in the euro zone that are really affected by the cost of the refugees and I don't think it would be right if we said we were unable to reach a zero structural deficit due to the costs of the refugee crisis and then still got punished by the Commission," Hans Joerg Schelling said after a meeting of eurozone finance chiefs.

Other countries sounded more wary, with Belgian minister Johan Van Overtveldt saying: "Our opinion is that we should be very careful."

He warned that rules should not be changed "whenever something happens in the world."

Among the countries on the Western Balkan migrant route, Croatia, Slovenia, and Greece are already in breach of the EU deficit rules.

Spending in Austria, Hungary, and Germany might also be at risk of being stretched by the crisis.

EU budget is limited

Juncker called on member states, the European Parliament, the European Investment Bank (EIB) to think about methods of additional financing to find the money “we need to meet the crisis.”

He said the EU budget is limited, and the Commission has already made all the emergency funds available.

“The EU budget is too small to deal by itself with the problems we face,” he said.

The EC president also called on the member states to deliver faster on what they have promised to do so.

“We need to speed up hotspots and relocation, relocation is not working the best way possible,” he added.

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The success of the action plan agreed by EU and Balkan leaders on Sunday will depend on funding, member state cooperation and migrants' good will. None of them are guaranteed yet.

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Jean-Claude Juncker's pledge to stretch the 3 percent deficit ceiling for member states hosting migrants is a good idea for crisis management, but it can also increase creative accounting and political meddling.

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