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Eurozone Favors Granting Extra Time To Meet Budget Targets

July 8, 2014

VIENNA (Alliance News) - Eurozone finance ministers on Monday suggested providing more time for member nations to meet their deficit targets.

"The nations that adopt front-loaded reforms should buy more time to meet their budget target, Dutch finance minister Jeroen Dijsselbloem, who is also the chairman of the Eurogroup, said.

"There is room for flexibility," Dijsselbloem said. "Discussions on how to make fiscal rules more flexible are going on."

Italy, with the second-highest debt in the euro area, wants to focus on stimulating growth than on fiscal rules that fix budget gaps. Italy and France were pushing for more flexibility amid opposition from Germany.

Irish Finance Minister Michael Noonan said fiscal rules were designed at the time of fiscal crisis. Now that the euro zone has settled down, the rules should be revisited, he said.

Further, euro area finance ministers noted that reducing the tax wedge on labor is one of the structural reforms that can make the economies more competitive.

Euro area countries have a joint interest in raising employment and stressed the need for tax wedge reductions to be financed through cuts in less productive expenditures or through revenue-neutral tax shifts.

At the press conference, Dijsselbloem said Greece has achieved the first set of milestones related to the fourth review, the so-called May set of milestones. This will unlock EUR 1 billion payment to Greece.

The Greek authorities reassured that the part of the fourth review will be completed by early August. The technical team of troika is set to visit Athens later this week to take stock of the situation.

The Economic and Financial Affairs Council (Ecofin) is set to meet in Brussels later today.

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Source: Alliance News

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