EC debt rules still 'inadequate' for countries reforming pension systems
EUROPE - The Polish finance minister has called new proposals for how pension debt is calculated as part of a country's annual debt level "inadequate".
Earlier this week, the European Commission offered the country the opportunity of a 1% increase in permissible new debt over the next five years, meaning Poland could accumulate 4% of gross domestic product as debt each year, rather than the current 3%.
However, finance minister Jan Vincent-Rostowski said the proposals did not sufficiently address Poland's problems, as reforms to its pension system accounted for 2.4% of new debt alone, adding: "The Commission's proposals are quite inadequate."
Marek Belka, the governor of the Polish central bank, echoed the minister's sentiment.
The five-year period of leniency would also apply to the current 60% cap on debt-to-GDP ratio, which Poland and eight other countries including Sweden, Romania and the Czech Republic recently criticised in a letter to the Commission.
The countries have instead asked that debt relating to pension reforms be exempt from any debt calculations.
Previous discussions revolved around the 60% threshold, which is stipulated in the Maastricht treaty, and whether it should be enforced more strictly.
The overall debt-to-GDP ratio in the EU is predicted to be 84% by 2011, while euro-zone countries are forecast to see the ratio rise to 88%, according to figures released as part of a European economic forecast in May.
At the time, Greece was predicted to be the worst offender in 2011, with debt accounting for 134% of GDP, followed by Italy and Belgium, with 119% and 101%, respectively.
Sweden was only predicted to have a debt-to-GDP ratio of 42%, by far the lowest of all 27 member states.