EU: The European Commission said yesterday it was unlikely to punish EU members which breached the bloc's budget deficit limit as a result of granting aid to survivors of the tsunami disaster.
The EU executive is charged with taking disciplinary action against any member-state whose budget deficit exceeds 3 per cent of gross domestic product, action that can lead to a hefty fine in the case of euro zone members.
But the Commission's monetary affairs spokeswoman, Ms Amelia Torres, said the Commission was expected to treat the aid as "an exceptional circumstance".
Aid cannot automatically be excluded from the deficit, she said. The limit is part of the EU's Stability and Growth Pact to help protect the single currency from fiscal profligacy.
"All expenses must be counted during the assessment of the size of the budget deficit," she said. "But the tsunami aid may be treated as an exceptional circumstance." Ms Torres recalled the Commission had taken this approach when faced with extra German spending on flood relief several years ago.
Chancellor Gerhard Schröder pledged yesterday to increase Germany's aid to tsunami-hit countries to €500 million, a sum which would have little effect on a German budget deficit which the Commission has forecast at 3.9 per cent of GDP.
Germany, France and other EU members have abused budget deficit rules in the past, and Berlin is pushing for a relaxation of the Stability Pact. - (Reuters)