Poland reached an agreement with the European Union aimed at loosening public finance rules in order to take into account costs of pension reform, Poland's Finance Ministry said on Friday. The Finance Ministry's press office added that details of the deal will be discussed and agreed on at an ECOFIN meeting in the first quarter of 2011.
"The European Commission is no longer negating the fact that pension reform costs have to be accounted for when calculating public debt and deficit," Finance Ministry's press office said on Friday. Poland wanted to change the debt rules in order to avoid overturning reforms, which are beneficial in the long term, but put additional pressures on public finances in the short term.
European Commission spokeswoman Pia Ahrenkilde-Hansen said that Commission President Jose Manuel Barroso and Poland's Prime Minister Donald Tusk discussed the issue of pension reform costs in EU budget deficit accounting by telephone on Friday.
They agreed that when the EU executive arm assesses whether a country is in line with the EU's debt and deficit limits, pension systems should be closely evaluated. A Commission spokesman said such an evaluation of pension systems should be based, among other things, on the structure of the pension system with respect to the ownership of assets and risks related to future pension payments and the impact on the stability of public finances.
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