EU states might get budget relief on refugee costs: officials

Reuters News
Posted: Oct 05, 2015 12:36 PM

By Francesco Guarascio

LUXEMBOURG (Reuters) - European Union countries might be allowed to exclude costs of the migrant crisis from budget deficit calculations on a case-by-case basis, EU officials said, as Austria pushed for its spending on refugees to be exempt.

Euro zone countries are obliged by EU laws to bring their budget close to balance or into surplus in structural terms.

Austria, one of the countries most affected by the migrant crisis, last year reached the required budget balance in structural terms - which exclude one-off items and revenue and spending fluctuations caused by the business cycle - with a 0.4 percent deficit.

But in May the Commission forecast that this deficit will double in 2015 and grow to 1.4 percent in 2016 unless policies change.

Budgets of several other EU states including Italy, Greece, Hungary and Germany also risk being stretched by the crisis, which has seen hundreds of thousands of migrants reach Europe this year, having fled war and poverty in the Middle East and North Africa.

While spending on the refugees is more likely to count as an exceptional, one-off item, Vienna is still keen to have that cost removed from the calculations.

"There are some countries in the euro zone that are really affected by the cost of the refugees and I don't think it would be right if we said we were unable to reach a zero structural deficit due to the costs of the refugee crisis and then still got punished by the Commission," Austrian Finance Minister Hans Joerg Schelling said.

"We only want, as is usual for cases of a catastrophe, these costs to be removed. The Commission will make a proposal on this," he said as he went in to a meeting of euro zone finance ministers.

EU Economic and Monetary Affairs Commissioner Pierre Moscovici said the issue was not on the agenda of the meeting but that the Commission was looking into it.

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"We are carrying out a legal, financial and economic analysis on whether there are exceptional circumstances," he said.

A Commission official who asked not to be named said EU budget rules could accommodate such unforeseen circumstances.

"If the Commission receives a specific request from a member state, we will examine whether the flexibility rules under the (fiscal) Stability and Growth Pact could apply," the official said.

"The assessment would need to be made on a case-by-case basis as part of the analysis of national fiscal documents."

The chairman of euro zone finance ministers Jeroen Dijsselbloem agreed any consideration by the Commission of such requests should be case-by-case "because there are major differences between countries."

(Reporting By Phil Blenkinsop and Jan Strupczewski, writing by Jan Strupczewski; editing by John Stonestreet)