No cliff-edge stop to euro zone fiscal stimulus seen -Eurogroup head

Euro zone public debt has risen sharply over 2020

  

BRUSSELS- There will be no abrupt ending of fiscal support to euro zone economies, but only a gradual shift to helping investment and reforms as the COVID pandemic gets under control, the chairman of euro zone finance ministers Paschal Donohoe said on Monday.

Euro zone public debt has risen sharply over 2020 and is likely to exceed 100% of GDP this year as governments borrow to help individuals and businesses survive lockdowns of economies aimed at curbing the pandemic.

The EU has therefore suspended its rules limiting the size of budget deficits and debt increases and EU ministers are to discuss when to start returning to any limits in the second quarter of this year.

"I believe it important that finance ministers debate and reach a common understanding on the appropriate fiscal stance by the summer. This can then serve as guidance for the preparation of their draft budgetary plans for 2022," Donohoe said.

"To avoid any misunderstanding, let me stress that this is not about an imminent withdrawal of fiscal stimulus," He told the economic committee of the European Parliament.

"We all agree that our immediate priority is to shield our citizens, in particular younger cohorts and those most exposed to the crisis. There must be no cliff-edges," he said.

(Reporting by Jan Strupczewski) ((jan.strupczewski@thomsonreuters.com; +32 2 585 28 64; Reuters Messaging: jan.strupczewski.reuters.com@reuters.net))

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