The planned reform of fiscal regulation in the EU should require the governments of countries with a high degree of debt to annually reduce their debt by at least 1% of GDP, according to a document of the German authorities, which was seen by the Reuters agency.

A document by the German authorities, prepared for presentation in the coming months as part of discussions in the EU bloc, stipulates that countries with an average level of debt should annually reduce their debt by at least 0.5% of GDP, Reuters reported on Sunday, citing Agerpres.

The EU has not yet determined which countries will be classified as “highly indebted”, but Greece (178%) and Italy (147) currently have the highest levels of public debt as a percentage of GDP among EU member states. %).

Under the proposal, seen by Reuters, the EU’s existing limits of 3 percent of GDP on budget deficits and 60 percent of GDP on debt would be maintained, and governments with more debt would discuss with the EU individual debt reduction paths linked to reforms. and investments.

Given that debt levels in many EU member states exceed the 60% of GDP threshold, they will have between 4 and 7 years to return to a downward trajectory, which will be agreed with the EC based on a debt sustainability analysis.

The proposal to discuss individual ways of reducing the debt would give too much political power to the European Commission, Germany believes

The government can ask for more time to pay off the debt if it promises reforms and investments that promote growth or sustainability, strengthen public finances or address EU strategic priorities such as the digital and green transition or defense capabilities.

If the economy faces shocks beyond the governments’ control, there will be a special provision that would allow a temporary departure from the agreed debt reduction deal, although this would have to be approved by other governments.

Germany and other EU member states are concerned that the proposal to discuss individual debt relief would give the European Commission too much political power.

“The regulation should establish a lower limit for the necessary reduction in the level of public debt as a percentage of GDP. The threshold value should be a fall of at least 1% of GDP for countries with a high degree of debt and at least 0.5% of GDP for those with an average degree of debt,” the Berlin authorities said in a document.