Parity Update :




Euroland: Bad News from the Past, but Don't Question the Stability Pact



Vincenzo Guzzo and Annamaria Grimaldi (London)

Morgan Stanley

the article





from Public Accounts in the Fray Again



This is the fourth time that we have had to revise upwards our budget deficit forecasts for the euro area in the last two weeks. First, the French government asked for an independent audit of its public finances, the final verdict of which was to raise the 2002 official deficit target by more than half a percentage point, to 2.3-2.6% of GDP. Then, on June 25, the National Statistics revised up Italy's 2001 deficit by two tenths to a reading of 1.6%, on the back of higher-than-expected health expenditure, as more information was gathered from local administrations. One day later, Portugal was in the spotlight with the news that a preliminary report from the ECB would put its 2001 budget deficit to 3.9%. Then, on July 3, it was Italy again in the fray with the official announcement by Eurostat that a large fraction of the receipts arising from the securitization of its state assets will be excluded from the 2001 budget balance, probably pushing it close to -2.2%. But let us have a closer look at these cases.





and this interesting note ...forexnews


7/10/2002 11:53:00 AM France's new center-right government passed a new budget with provisions including an income tax cut at the risk of violating the 3% limit set by the EU Stability Pact. As it stands, the new budget will create a deficit of 46 billion euros or 3.2% of GDP, but the government hopes to close the gap with surpluses in local authority and other finances. While the French government claims that the new budget will stay within the limit, it can balance the budget by 2004 only if the country achieves growth levels of at least 3% in the next two years.