EU's Rehn wants closer monitoring of member state budgets

(HELSINKI) - European Monetary Affairs Commissioner Olli Rehn in an interview published Monday urged that the budgetary policies of European Union (EU) countries be monitored more closely.

"It is better to create a fire brigade before the fire," Rehn told Finnish business daily Kauppalehti, adding that the preliminary monitoring of national budgets was central to ensuring corrective measures could be taken to avert trouble.

"If this is not implemented we can never make the monetary union as functional as it should be," Rehn said.

As a former parliamentarian, Rehn said he understood the sensitivities related to parliaments' budgetary powers but added that it was "completely reasonable" to expect member states to comply with commonly agreed rules for the implementation of resolute budgetary discipline.

The preliminary monitoring would not mean a thorough point-by-point review of national finances, but the European Commission would aim to evaluate member states' budgets and provide recommendations as needed.

"From the perspective of the eurozone, the main budget policy and the balance of public finances are of interest," Rehn said. "Member states should be able to correct their operating strategy before it is too late and the damage is already done."

Rehn also said more attention should be paid to debts, and those countries whose debt rate clearly exceeds 60 percent of gross domestic product (GDP) should be subject to surveillance.

His remarks came as the European Union approved a massive rescue mechanism, backed by the IMF and central banks around the world, worth nearly a trillion dollars to shore up troubled eurozone econmomies and stabilise financial markets.

The initiative sent stock markets soaring Monday as the sagging euro strengthened.