This article has been saved to your Favorites!

Don't Count Interest On EU Debt In Budget, Official Says

By Matt Thompson · October 14, 2020, 2:24 PM EDT

Interest on debt taken on by the European Union as a way to fund the unprecedented coronavirus recovery package shouldn't be taken out of relief amounts for other European programs, a lawmaker responsible for negotiating the budget said Wednesday. 

Interest on debt is an exceptional expenditure and therefore shouldn't compete with programs intended to improve the lives of Europe's citizens, Johan Van Overtveldt, chairman of the Committee on Budgets in the European Parliament, said in a statement released on the Parliament's website. Removing interest on debt from the calculation of relief funding frees up an additional €13 billion ($15.3 billion), he added. 

"The bulk of it is not additional money, but merely about making sure that, out of the agreed spending, not a single euro can be lost due to underexecution," Van Overtveldt said.

The Council of the EU — consisting of ambassadors from the 27 EU member countries —  and the bloc's Parliament are at loggerheads in negotiations over the EU budget, which must be approved before the coronavirus recovery package can be disbursed to European countries.

Talks between the two sides broke down last week and were meant to get back underway Wednesday after an EU official said Tuesday that a deal was within sight. However, bitter recriminations continue to fly between the sides about exactly what needs to be included in the budget, and who is to blame for the lack of progress in the talks.

"Support to the citizens and businesses is urgently needed" due to the worsening coronavirus pandemic, Van Overtveldt said.

Disagreement also remains on how the EU budget is to be funded, with the Parliament requesting new "own resources" — funds raised by the EU. The revenue streams and quasi-tax measures were given Parliament's approval by a 455-146 vote, with 88 abstentions.

It is now up to the European Council to approve the measure so it can be ratified by national parliaments.

"The council needs to greenlight the launch of the ratification process to ensure relief can quickly reach those most hit by the COVID-19 crisis," Van Overtveldt said. "Parliament did its part on this." 

Possible methods for the new revenue streams include a plastics tax, levies on aviation fuel and maritime fuel, a carbon border tax and a new tax on digital services.

The European Council did not immediately respond to a request for comment.

--Editing by Neil Cohen.

For a reprint of this article, please contact reprints@law360.com.