Valdis Dombrovskis, Vice President and European Commissioner for the Euro and Social Dialogue said that the European Central Bank is achieving its inflation targets and is also helping to evaluate the debt burdens. ‘With inflation approaching the ECB’s targets, we are certainly having faster nominal growth and we are growing out of our debt burdens. There are two ways you can deal with the debt burden: you can try to reduce your debt burden by paying it back or you can try to grow out of your debt burden by growing your economy. With inflation approaching ECB’s target certainly we having faster nominal growth and we are growing out of our debt burden’, said the former Latvian Prime Minister when reacting to Dr. Alfred Sant’s intervention at the Economic and Financial Committee at the European Parliament.
Dr. Sant addressed the Economic Dialogue on fiscal surveillance at the European Parliament in Brussels. ‘Now we are in a period where the euro itself has reached the lowest ever parity rates with the main world currencies. Will this not mean that the small cluster of economies within the euro zone lead by Germany, which have been relatively high performers will now enjoy the benefits of painless undervaluation in its terms of trade both inside and outside the eurozone? Will this not increase the divergences, economic and other between the two clusters of economies in the zone? Should this possibility be of any interest or concern? Should it be addressed? If yes, what effective tools does the EC have to enable such address? asked Dr. Sant.
Dr. Sant said that the focus within the euro zone in past years has been on achieving fiscal balance within the national economies where economic divergences between national economies and within them have been growing. He said that a dual system has developed where a small cluster of economies led by the strongest economy in the system, the German one, have high productivity and potential for sustained growth; and a wider cluster consisting of the other economies have remained with lower productivity and growth potential.
Dr. Sant said that under eurozone conditions, the small cluster has enjoyed undervaluation in its terms of trade with the rest of the zone. This gave it the economic base from which to achieve further economies of scale when selling outside the zone.
Dr Sant was shadow rapporteur for the S&D on the Annual Growth Survey report 2015 which was voted in the March plenary session.
You may view Alfred Sant’s intervention and Dobrovskis’ reply on video below:
Maltese Version
‘IL-BANK ĊENTRALI EWROPEW QED JILĦAQ IL-MIRI DWAR L-INFLAZZJONI’ VALDIS DOMBROVSKIS LIL ALFRED SANT
Valdis Dombrovskis, Viċi President u Kummissarju Ewropew għall-Ewro u Djalogu Soċjali qal li l-Bank Ċentrali Ewropew qed jilħaq il-miri dwar l-inflazzjoni u jgħin fl-evalwazzjoni tal-piżijiet tad-djun. ‘ Bl-inflazzjoni viċin il-miri tal-ECB, qed ikollna tkabbir nominali u noħorġu mill-piżijiet tad-djun. Hemm żewġ modi kif tiffaċċja d-dejn: jekk tħallsu lura jew tipprova tkabbar l-ekonomija tal-pajjiż’, qal l-ex Prim Ministru tal-Latvja meta kien iwieġeb għal intervent ta’ Dr. Alfred Sant fil-Kumitat tal-Ekonomija u l-Finanzi fil-Parlament Ewropew.
Alfred Sant qal li qegħdin fi żmien meta l-Ewro qed tersaq lejn l-anqas valur komparata mal-muniti ewlenin oħra. Sant staqsa jekk dan ifissirx li l-ekonomiji ż-żgħar fiż-żona Ewro li fl-aħħar snin kellhom ekonomiji b’saħħithom issa se jgawdu mill-benefiċċji kemm ġewwa u barra ż-żona Ewro. Dr. Sant staqsa jekk il-Kummissjoni Ewropea kellhiex l-ghodod effettivi biex tindirizza din is-sitwazzjoni. Alfred Sant qal li fl-aħħar snin fiż-żona Ewro l-enfasi kienet dwar il-bilanċ fiskali fl-ekonomiji tal-pajji’i membri. ‘Żviluppat sistema doppja fejn l-ekonomiji ż-żgħar immexxija mill-aktar ekonomija, dik tal-Ġermanja, kellhom produttivita’ għolja u potenzjal għal tkabbir sostenibbli; u għadd ta’ ekonomiji f’pajjiżi oħra baqgħu bi produttivita’ u tkabbir potenzjali baxx.
Dr. Sant kien ix-Shadow Rapporteur tal-S&D fuq ir-Rapport tat-Tkabbir Ekonomiku għal 2015.
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