March 21, 2019 / 6:38 PM / 3 months ago

German conservatives eye sanctions for EU debt ceiling violators

BERLIN (Reuters) - German conservatives aim to tighten enforcement of the European Union’s debt ceiling target, under which public debt amounts to no more than 60 percent of national output, according to the political bloc’s draft programme for European elections.

Chancellor Angela Merkel’s Christian Democratic Union (CDU) and its CSU Bavarian sister party pledged in the draft to work to “limit the margin of latitude in deficit procedures and create more opportunities for sanctions in Europe”.

Germany itself is poised to meet the EU debt ceiling target soon, Finance Minister Olaf Scholz said last year. But many other euro zone states miss the 60-percent target set by the 1992 Maastricht Treaty.

The draft programme prepared by German conservatives, seen by Reuters, calls for continued work to achieve a European banking union, but also says existing risks in the banking system must first be addressed.

“In particular, government bonds should not be viewed as risk-free,” said the programme, which the two parties expect to approve on Monday. It also says the conservative bloc opposes using taxpayer funds for bank bailouts.

The draft calls for providing “sensible” funding to the EU budget, but does not explicitly call for a boost in Germany’s contributions, as was agreed in the coalition agreement signed by Merkel’s conservatives and the centre-left Social Democrats early in 2018.

The draft also opposes any moves to curtail agricultural subsidies.

Reporting by Andreas Rinke; Writing by Andrea Shalal; Editing by Alison Williams

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