European Commission President Mr Romano Prodi said this morning countries should respect the Stability and Growth Pact but added that the Pact's rules must be applied intelligently.
European Commission President Mr Romano Prodi said this morning countries should respect the Stability and Growth Pact but added that the Pact's rules must be applied intelligently.
"Any rigidity is always stupid by definition but thestability pact must be respected in all its aspects but must be done in a way to help the economic recovery," Mr Prodi told reporters on the sidelines of a banking conference.
In his speech to the conference Prodi, who caused an uproarlast month when he said the stability pact was stupid andinflexible, insisted he had always been a strong supporter of the pact.
But he said its rules needed to be applied intelligently.Growth and jobs depended on stability and the Pact had helped in this regard.
"We must ensure that the Pact applies both during periods ofhigh cyclical growth and in recessions, and to small and large member states," he said.
"We can strengthen the Pact by interpreting and applying itsrules intelligently. Only thus can we meet the challenges facing the Union in the short, medium and long term," he added.
The EU's budget rules are designed to limit countries' budget deficits to below three percent of gross domesticproduct.
Prodi said stability and growth were not incompatible.
"We will be putting forward proposals next week to improveeconomic policy coordination and increase transparency anddiscipline in the way the Pact is implemented," he said.
"Our proposals will also seek to underline the preventiveand constructive aspects of economic policy coordination."