Vol. 5 Num 295 Sat. March 26, 2005  

IMF examines EU deal to relax budget rules

The International Monetary Fund said Thursday it was looking into a deal clinched by European Union leaders to relax the bloc's enfeebled fiscal rules.

IMF spokesman Thomas Dawson said that "of course we are naturally examining the implications of the changes."

At summit talks on Tuesday, EU leaders endorsed reforms to the 1997 Stability and Growth Pact, which enshrines the rules underpinning Europe's single currency.

Eurozone heavyweights France and Germany fought hardest to push the changes through, having struggled for years to meet its headline limit on budget deficits.

The European Central Bank, the guardian of the euro, expressed "serious concern" about the planned reforms, fearful they will encourage fiscal profligacy.

Dawson said the IMF would look in detail at the changes when it conducts a periodic review of the 12-nation eurozone's economy this spring.

"Our view remains that Europe's problems are preeminently structural and need to be addressed through reforms laid out within the context of fiscal frameworks focused on (budgetary) consolidation," he said.

"Consolidation is going to be an important theme."