92002E0380

WRITTEN QUESTION E-0380/02

by Ioannis Marínos (PPE-DE) to the Commission

(21 February 2002)

Subject: Misleading presentation of public debt

By exploiting the method of calculating public debt used by the Union's statistical services, some Member States are using new methods of expanding their debt without the corresponding increase being reflected in the statistics.

In specific terms, government bonds are issued against future government or public company revenue which is not always certain to materialise. Recently, new bonds were issued against anticipated funds from the EU's 3rd Community Support Framework. These loans are not recorded as public debt and, therefore, in the short term the debt appears, falsely, to have decreased, whereas in fact it not only remains outstanding but has increased at the same time as incurring very high interest-rate charges. The emergence of the debt and its payment are simply deferred to a later point in time to burden future generations and governments who will have to deal with a problem for which they bear no responsibility. The International Monetary Fund has already sharply criticised such creative accounting.

Is the Commission aware of this matter? Has it investigated which countries employ these methods? Does it intend to change the method of calculating public debt to show the actual extent of the debt? If not, is it not inevitable that Member States' public finances and, consequently, the general economic situation in the Union will deteriorate in the medium term?

Answer given by Mr Solbes Mira on behalf of the Commission

(4 April 2002)

The Commission is aware that some Member States have securitised future revenue streams through special purpose vehicles (SPV).

A Task Force of statistical experts from Member States is currently examining this matter in relation to existing rules and will make recommendation to the Committee for Monetary, Financial and Balance of Payments statistics (CMFB) on appropriate accounting treatment in line with existing Maastricht debt definitions.

A change in the method of calculation of public debt is not being contemplated at present.

Based on existing information, the Commission does not see that actions undertaken will endanger budgetary policy co-ordination or will lead to any deterioration of public finances.

The stability and growth pact has proved to be an effective tool for budgetary policy co-ordination enabling the necessary macro-economic stability, which fosters growth and employment in the medium term.