The European Union Commissioner for Economic and Financial Affairs Olli Rehn defended Euro-zone governments' crisis plans Friday, after Standard & Poor's downgraded nine out of 17 of the economic bloc's member states, a decision which he described as “inconsistent”.
Rehn took a stab at S&P for previously releasing a false statement accidentally, in a statement that lauded Euro-zone governments and the European Central Bank for effectively easing market tensions.
After verifying that it this time is not accidental, I regret the inconsistent decision earlier today by Standard and Poor's concerning the rating of several Euro area Member States, at a time when the Euro area is taken decisive action in all fronts of its crisis response, Rehn said.
These initiatives push forward the necessary fiscal consolidation and structural reform in our Member States, address the fragilities of the banking sector, reinforce our financial backstops and strengthen our economic governance, he added.
Rehn also said it is important that Euro members push forward the launch of the European Stability Mechanism, the bailout fund set to take the place of the European Financial Stability Facility, whose credit rating relies on the ratings of its backers. Heads of government already agreed to try to advance the ESM launch to mid-2012 from 2013 at a December meeting.
”ESM will have its own capital base and thus will be less vulnerable to changes in ratings of its Member States”, said Rehn.
EU countries with the exception of the UK agreed last December a fiscal pact to reinforce fiscal union and the economic coordination of the Euro zone, which contemplates sanctions, almost automatically for countries with fiscal deficits above 3% of GDP. The deal is scheduled to be debated at the end of the month in a summit in Brussels with the purpose of its ratification and enforcement as of next March.