EU Approves Deficit Breach for Tsunami Aid | Business| Economy and finance news from a German perspective | DW | 05.01.2005
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EU Approves Deficit Breach for Tsunami Aid

The European Commission on Wednesday said it would refrain from punishing EU members who violate the euro zone’s budget deficit limit as a result of granting aid to survivors of the Asian tsunami disaster. The EU executive, which is responsible for monitoring budget discipline in the bloc and has the authority to take disciplinary action against members whose budget deficit exceeds three percent of gross domestic product, said it would treat the millions of euros in aid as “an exceptional circumstance.” The Commission’s monetary affairs spokeswoman Amelia Torres said the Commission had taken the same position when faced with high spending for flood relief in the eastern part of the Germany two years ago. Berlin, which pledged €500 million ($680 million) in tsunami aid, has already violated the deficit ceiling three years in a row and is in danger of doing so again. But the Commission doubts the significant contribution will have much effect on the country’s budget deficit which is expected to be about 3.9 percent of GDP.

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