What is truth?


One interesting point on Fiscal Compact, folks. The 1/20th adjustment rule has been interpreted widely as the rule requiring states with debt/GDp ratio in excess of 60% to reduce their debt levels by 1/20th of the gap between their existent debt level and the 60% bound. However, the Treaty itself states: “the obligation for those Contracting Parties whose general government debt exceeds the 60 % reference value to reduce it at an average rate of one twentieth per year as a benchmark” (page T/SCG/en5). In other words, there is a big gap between interpretation and reality.
Hat-tip for this discovery goes to Peter Mathews, TD

full article at source: http://trueeconomics.blogspot.de/

Comments on: "One interesting point on Fiscal Compact, folks" (1)

  1. So, with Ireland’s Public Debt to GDP ratio currently at 153.8% that means wee will need to adjust annually, for the first year anyway by 20% of 93.8% or 18.76% of GDP Yes!
    I presume you are referring to Public Debt to GDP and not External Debt to GDP ‘cos that’s in the stratosphere 1,240% and still rising!
    Great article, well done!

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