Mario Centeno: “I would say to Spain that it is very important to fulfill the commitments”

The president of the Eurogroup, Mario Centeno, has had to listen to the Davos Forum the long list of pending tasks that the eurozone accumulates, from completing the banking union to creating the famous Eurobonds. In an interview with the Economist, the Portuguese Finance Minister, and coordinator of the meetings with his euro colleagues, says that “we have a good opportunity” to agree on the European Deposit Guarantee in this mandate, before 2024. On the Spanish budget, he gives as an example the Experience of your country: the important thing is to fulfill the commitments assumed.

Will we see this mandate the European Deposit Guarantee System (EDIS) to protect European savers in the same way throughout the eurozone?

I think we have a chance.

Would you bet your savings?

My savings are not worth that much. I think we have a chance, we are aware and I see that people are engaged.

“Recent experience showed us that there are no unique policies for everyone”

In the coming weeks, the European Commission will launch a consultation with the Member States on the revision of the Stability and Growth Pact. Excluding green investment from the calculation of the deficit is one of the most controversial ideas, with countries for and against. Do you think this proposal will go ahead?

There is something about which we must agree. We must have coherent policies in Europe, and especially for those initiatives where a European perspective is needed. Climate change is a global, important problem. It is also a European policy, chosen by the countries. Therefore, we must channel our policies in that regard.

Otherwise, we would be decoupling, and citizens would be a bit disappointed and bewildered. Therefore, I see good reasons to consider that we can support green investment. If it is not in the context of the revision of fiscal rules, it would be in terms of the communication from the European Commission (on the implementation of the Stability and Growth Pact), also adopted by the countries, to accommodate these investments.

Another part of the review of the Stability and Growth Pact focuses on ending the use of structural effort and the output gap, difficult to estimate, in the control of national accounts. There seems to be more consensus on this point. Could it be one of the results of the review?

Let me first say that the Covenant has worked very well. It has left us in a position with no country with an excessive deficit procedure. We have very close fiscal positions. This is the result of the multilateral surveillance of the Covenant. That said, we can improve the clarity of the rules. That is the basic approach we can follow. If this implies choosing different indicators from the existing ones, it can be done without jeopardizing the general structure of this important multilateral system.

Asking about his Iberian neighbor, we have a new government in Spain. The new coalition has a fragile majority to approve major reforms, and announced that it will increase spending despite the adjustment demanded by the European Commission. In this context, what role do you expect Spain to play among the big economies of the euro?

In terms of economic and budgetary policy, recent experience showed us that there are no single policies for everyone. The combination of policies is important to gain confidence, both domestically and externally. Portugal is a very good example of this. We committed ourselves to a fiscal path and achieved, year after year, fiscal objectives.

In terms of economic and budgetary policy, recent experience showed us that there are no single policies for all

We generate a growing confidence in our economy, because commitments are of the utmost importance in the post-crisis period. As the Portuguese experience shows, Spain would say that it is very important to fulfill the commitments. The reforms that the Spanish government has identified, and that promote potential growth, fit this European perspective.

And regarding tax adjustments?

What I heard from Minister Calviño was her firm commitment to continue with the process of fiscal consolidation and reduction of public debt.

With respect to 0.65% of the GDP of the adjustment requested by the European Commission, we are now in the context of an economic slowdown. To what extent should the Commission be more flexible to support growth? Or is it important to enforce the rules for credibility, also in the eyes of the markets?

I will not comment on the numbers, because those are Commission numbers and the result of their analysis. We expect Spain to present a draft budget plan as soon as possible. This will happen sometime this year, although we have not yet heard a date. When the numbers arrive we will see if they match.

Remember that the current framework leaves room in terms of flexibility with respect to changes in the economic environment. But Spain is a country that is supposed to have strong economic growth, and all international agencies and analysts believe that it will continue in the future. Therefore, Spain does not have a growth problem.

Even if you have to wait for the draft budget, the new government made promises of social spending …

In Portugal we could accommodate that. Again, we can be seen as a good example of an adaptation to new policies within the framework of European standards. And believe me, in worse conditions of economic growth.

Would you like to continue as president of the Eurogroup?

I am focusing on completing this mandate. At the end of the semester, we will see how things develop. I don't have a decision made

But is there any will?

I really like what I do but a mandate is a mandate.

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