The European Union is considering granting additional time to member states to balance their budgets if they invest in ramping up ammunition production, a priority following Russia’s invasion of Ukraine.
(Bloomberg) — The European Union is considering granting additional time to member states to balance their budgets if they invest in ramping up ammunition production, a priority following Russia’s invasion of Ukraine.
Military spending, including on bullets and shells, would be viewed as supporting one of the key strategic goals of the bloc and would extend the time national governments have to adjust their public accounts to as much as seven years, according to EU officials.
The idea is part of the review of the EU’s Stability and Growth Pact, the rules controlling public spending, and would come in addition to the European Commission’s plans to bolster the defense industry due next week.
The commission, the EU’s executive arm, has made legislative proposals on its fiscal rules that would give more flexibility to member states to lower debt and more space for investment.
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Ammunition has become a priority for the EU as a result of Russia’s aggression against Ukraine. The bloc has committed to give 1 million shells to Kyiv over the next 12 months to support its war effort and would need to replenish its stocks and reinforce its production to avoid future shortfalls.
A commission spokesperson said that in order to receive extra time, each member state’s reforms and investment proposals would be assessed together and should be “sufficiently detailed, front-loaded, time-bound and verifiable.”
The investment and reform packages “must be growth enhancing, support fiscal sustainability” and address relevant recommendations issued to each member state, the spokesperson added.
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The proposal still needs the approval of EU member states and the European Parliament.
Estonia first proposed last February supporting Ukraine by jointly purchasing at least 1 million ammunition rounds for the country.
Its finance minister, Mart Vorklaev, said, however, that the bloc should be “more conservative” about granting additional leeway to national governments in case of investment in ammunition production.
“We have to consider faster how to move to balanced budgets again,” he told Bloomberg News on the sidelines of a meeting of EU finance chiefs and central bank governors in Stockholm, where the proposals for the new fiscal rules were discussed informally. “We have to do both: invest in green and defense priorities and try to fix our budgets.”
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