|Athens, Paris, and Rome urged to get fiscal house in order, deliver on structural reforms
Euro zone officials urged France's incoming government to stick to reform pledges, and Greece to capitalise on its painful austerity measures.
The call to Paris came as French President Francois Hollande hinted that France would seek leniency from the EU Commission for overshooting its public deficit target, as he announced a change of government.
(Pictured, Jeroen Dijsselbloem, right, flanked by Olli Rehn in Athens).
“It is essential that France act decisively, both to ensure the sustainability of its public finances, and to address well known bottlenecks to competitiveness and growth,'' said EU economic affairs commissioner Olli Rehn.
“For the sake of refreshing our memories, the existing deadline on France's deficit has already been extended twice,'' Rehn told reporters at a two-day meeting of European finance ministers in Athens.
Hollande wants EU authorities to take account of structural reforms in the making in France when analysing the deficit.
But Eurogroup chief Jeroen Dijsselbloem said on Tuesday: “I think France is well aware of its commitments. It's been given two years and there is obviously work to be done.''
“I will fully agree with the president of France, it is in the interest of Europe to have a strong France. [But] France has to deliver on its commitments under the growth and stability pact,'' Dijsselbloem said.
The French public deficit, or gap between spending and revenues, amounted to 4.3 percent of national output last year, official data showed on Monday.
This is above the target of 4.1 percent agreed with the EU, and raises the stakes as Hollande oversees the composition of a new government after a local election debacle on Sunday.
France needs to cut spending by 30 billion euros to compensate for the easing of business charges under its proposed Responsibility Pact, which is opposed by left-wing parties.
Separately, to meet EU deficit targets, Paris needs to adjust the budget balance by about 20 to 25 billion euros, making for a total adjustment of about 50 billion euros.
The Eurogroup had a similar message for Italy, where new Prime Minister Matteo Renzi has announced a 10-billion-euro tax cut for low-income families, a move that could put pressure on budget forecasts.
“We trust that Italy will respect its European commitments and focus on fostering sustainable growth and job creation,'' Rehn said.