Sintra, Portugal, July 2, 2024 (Lusa) - The president of the European Central Bank (ECB), Christine Lagarde, said on Tuesday in Sintra that there was concern about the "budgetary rules that have to be respected" in the European Union (EU).
Lagarde signalled at the ECB Forum in Sintra that fiscal policy is important, especially now that the reform of the budgetary framework has taken place "within which member states have to operate and control the direction of debt and ensure that it remains sustainable".
They have to do so "with flexibility, with sufficient focus on productivity and growth, with investment that leads to both," she pointed out, emphasising that he hopes that "operating within the European fiscal framework, countries will look at the structural changes they have to continue to make in order to have a set of tools" that will allow productivity to improve.
The ECB is "concerned about the fiscal rules that have to be respected within the EU and the structural reforms that will lead to an improvement in productivity, which is the only way for Europe to remain strong and prosper".
One of the countries with the most worrying budgetary situation is France and although the ECB president refused to comment directly on this specific case, she acknowledged that they are keeping a close eye on the situation.
Christine Lagarde pointed out that the institution has to be attentive to stabilising the financial markets and that is why it is also closely monitoring the political situation in France.
"The ECB has to do what it has to do, our mandate is price stability and we're paying attention to that because it's part of our job," she said, emphasising that these are the things they monitor.
On the US side, the chairman of the Federal Reserve (Fed), Jerome Powell, also present on the panel, emphasised that the country "is running a very high deficit" and that the level of public debt "is not unsustainable, but the trajectory at the moment is".
"It should be a focus going forward, thinking about how we get back to a sustainable trajectory" for public debt, warned the Fed chairman.
The governor of the Central Bank of Brazil, Roberto Campos Neto, also warned of the risks of high public debt, pointing out that the cost of servicing the debt of the US, the European Union and Japan is rising, and this has an effect on the market.
"Global debt is very high and will start to take liquidity out of the markets," he pointed out, emphasising that "low-income countries are already feeling it".
In his view, there are several "bills to pay in the future", such as the "cost of the green transition, the cost of fragmentation, the cost of the pandemic in low-income countries and also energy and innovation", so it's important to think about how to achieve a "stable debt trajectory".
MES/ADB // ADB.
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