Malta will have to start getting the EU to approve its national Budget plans before presenting them to Parliament if new proposals launched yesterday by the European Commission go through.

The Commission is also proposing the setting up of independent fiscal councils in every member state

In a clear move to deepen further economic and fiscal integration in the euro area, the Commission yesterday published a raft of new measures aimed at strengthening the rules underpinning the euro and their surveillance.

According to the new proposals, launched by Commission president Josè Manuel Barroso in Brussels, eurozone member states would have to present their draft annual budgets to the Commission by not later than October 15 of every year.

If, following an assessment by the Commission, it is found that the general budget thrust is not in line with the EU’s plans and the rules of the euro, the Commission will have the right to publish its opinion and ask for a revision of the budget by the member state in question before the annual budget estimates are presented to the national Parliament for its consent.

Mr Barroso defended the Commission’s actions against criticism that this move would infringe on countries’ sovereignty, insisting that the EU Executive was only trying to exercise fiscal and economic discipline.

The crisis faced by the euro, Mr Barroso stressed, had been brought about by lack of fiscal discipline.

He said member states would not be obliged to take the Commission’s advice and revise the budget. However, the Commission’s opinion would definitely put pressure on the particular member state to oblige. Moreover, the system can be used by the EU’s Executive to take further disciplinary action against non-complying member states.

“It is clear that without the deepening of discipline and surveillance we are putting at risk the euro’s stability,” Mr Barroso said.

“Frankly, I don’t know who, if not the Commission, can monitor member states and try to instil discipline. If we cannot do this, who can,” he asked.

Beyond stricter surveillance measures, the Commission is also proposing the setting up of independent fiscal councils in every member state of the euro area that would be responsible to monitor fiscal policies and issue independent economic forecasts.

Until now, national budget projections have been based on assumptions made by government on the economic performance of the country in the following year.

Through independent assessments, the government would have to start premising its projections on more independent and probably less positive forecasts.

With regard to member states under an excessive deficit procedure – the instrument used for countries with deficits higher than three per cent of GDP – the Commission is proposing stricter monitoring of their corrective programmes throughout the year and the possibility of fresh recommendations to boost their reforms. All EU member states, with the exclusion of Sweden and Estonia, are under an EDP. If the government’s projections for 2011, to lower its deficit of 2.8 per cent of GDP, is confirmed by the Commission early next year, Malta will be one of the first member states to close its EDP.

The Commission yesterday also launched a debate on whether the EU should in the future start issuing common debt bonds, to be known as stability bonds.

Stability bonds are seen by some as a potentially highly effective long-term response to the sovereign debt crisis.

Others are worried that they would remove the market incentive for fiscal discipline and encourage moral hazard.

The Commission made it clear that any move towards introducing stability bonds would only be feasible if there were a simultaneous strengthening of budgetary discipline.

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