Managing Director Christine Lagarde said however, the central
pool of money for the benefit of the euro zone could only be
made available to countries that respect the EU's budget rules
laid out in the Stability and Growth Pact (SGP).
"My idea is that in exchange for complying with the Stability
and Growth Pact, for complying with commitments on structural
reform, in return for that, countries would be pooling budgetary
resources in a common pot which could be used for projects and
certain operations," Lagarde said.
Structural reforms are key to boosting the euro zone's growth
rates and making its economies more resilient to shocks, she
She said the common pot of money could be used in a similar way
as the cash of the European Fund for Strategic Investments,
which uses a relatively small amount of EU money to attract 15
times more from private funds to finance concrete investments.
The new, centrally financed initiatives could "help offset
upfront net costs of structural reforms," the IMF said in a
report on the economy of the 19 countries sharing the euro.
Speaking after talks with euro zone finance ministers, Lagarde
told a news conference the new fund could pay for projects
related to migration, refugees, security, energy and climate
The idea of a euro zone budget was first floated in November
2012 by the European Commission in a report on how to complete
the Economic and Monetary Union.
The Commission said at the time that "a dedicated fiscal
capacity for the Euro Area should rely on its own resources and
provide sufficient support for important structural reforms in
large economies under stress."
But the idea was dropped in later reports on the future of the
euro zone, prepared by several EU institutions, because Germany
and its allies believed it would be wrong to provide financial
incentives to countries for reforms they had to do anyway for
their own good or were obliged to by EU law.
Germany, Estonia and Luxembourg are the only EU countries that
have posted budget surpluses since 2014.
Lagarde said the pooling of budgetary resources could put these
surpluses to good use.
"That really calls on those that can make those surpluses
available to others to actually do so," she said. "The IMF just
said what it thought about how Germany could use its fiscal
space which we continue to believe it has, so we gave a few
ideas of our own," she said.
(Editing by Hugh Lawson)
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