The head of the European Investment Bank (EIB) was quoted today as saying the EU's Stability and Growth Pact should pay more attention to the nature of government expenditure resulting in deficits.
"The authors of the pact did not sufficiently take into account the quality of the expenditure," Mr Philippe Maystadt, a former Belgian finance minister, told the Belgian financial daily
De Financieel-Economische Tijd
in an interview.
"Wouldn't it be better to have a deficit of 2 per cent of gross domestic product (GDP) as a result of growth-promoting investment than a 0.5 per cent deficit resulting from purely consumption expenditure?" he added, pleading that the European Commission should interpret the budgetary rules in such a way.
But Mr Maystadt said he did not want the deficit-curbing stability pact's 3 per cent deficit limit to be broken. He also said proposals to invest in public works programmes in the European Union would take years to have an impact on the EU's economy.
Moreover, Mr Maystadt warned not to expect everything from the EIB and private capital. "Even if we succeed in attracting private capital, for the large projects input from the state is still needed".