On Friday, 4 June, members of the European Affairs Committee and the Budget and Finance (Taxation) Committee expressed diverse opinions on the European Commission’s proposal to submit budget guidelines to EU institutions before they are adopted by the national parliaments. Members of parliament welcomed the positive impact this might have on observing fiscal discipline; however, they expressed concern that this proposal might infringe on national sovereignty. 

Broad discussions on this issue arose when both committees reviewed Latvia’s initial position on the proposals for strengthening economic policy coordination in the EU, which have been announced by the European Commission. 

“A well-considered political decision should be made in this regard. We have to decide whether we agree that for the sake of greater financial stability member states will submit their draft budgets to the EU for assessment before they have been adopted by national parliaments,” indicated Mrs. Vaira Paegle, Chairperson of the European Affairs Committee of the Saeima. 

“On the one hand, it could help to discipline member states and prevent them from creating an excessively large budget deficit; on the other hand, we have to thoroughly assess whether such an initiative infringes on national sovereignty and whether it complies with the Lisbon Treaty,” emphasised Mrs. Paegle. 

Mr. Guntis Bērziņš, Chairman of the Budget and Finance (Taxation) Committee, indicated that this proposal would make it possible to compare, in a timely fashion, Latvia’s principles of budget formation with those of other member states. However, he was sceptical about the possible introduction of financial sanctions against member states which do not comply with the requirements of the Stability and Growth Pact. 

“I am wary of the proposal to limit access to the Cohesion Fund for such member states because that would only aggravate the situation in countries suffering from financial problems. Perhaps we should consider some organisational sanctions,” proposed Mr. Bērzinš. 

Mr. Dzintars Rasnačs, member of the European Affairs Committee of the Saeima, criticised the proposal of the European Commission to evaluate budgets of the member states. “It is a question of Latvia’s sovereignty, and a decision on such a matter can be taken only after extensive discussions with experts and politicians. That could be a step towards creating a federal Europe and thus would infringe on the sovereignty of Latvia,” emphasised Mr. Rasnačs. 

On 12 May, the European Commission made public a number of proposals aimed at ensuring greater coordination of fiscal policy and economy coordination of the EU. Among these proposals, for example, there is the suggestion that already in the spring the member states familiarise the EU with their guidelines for drafting the next year’s budget.

The Commission also proposed stricter sanction mechanisms for member states that do not comply with the European Stability and Growth Pact and repeatedly allow an excessive budget deficit. One of the suggested sanction mechanisms is to temporarily deny access to the Cohesion Fund to these countries.

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