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Report: EU eyes reform of eurozone budgetary rules

European Commission officials are considering revising the eurozone's budgetary rules to soften debt reduction requirements for struggling economies and make them easier to enforce, the Financial Times reported, citing an internal EU document.

Officials are calling for a "substantial simplification" of the Stability and Growth Pact, which has resulted in "imprudent fiscal positions" and "procyclical fiscal policies" imposing significant restrictions on weak economies, according to the internal document. Under current rules, struggling countries must bring down their debt by 5% annually over three years to attain the pact's debt-to-GDP target of 60%, but slowing economic growth and low inflation could hamper debt reduction efforts.

The pact has also been criticized for providing leeway to some countries in violation of the rules, the FT said. Italy has avoided disciplinary action despite failing to comply with its fiscal deficit targets in 2018 and 2019.

Brussels reportedly intends to modify the rules within the first 12 months of the new commission headed by Ursula von der Leyen, who takes over from Jean-Claude Juncker in November.