Debt sustainability monitor 2016

The economic and financial crisis has left a legacy of high public debt burdens in a number of EU countries, in some cases accompanied by contemporaneously high debt in the private sector, thus making deleveraging more difficult. Furthermore, the current macroeconomic context of moderate GDP growth and very low inflation (well below the ECB objective of below but close to 2%) is not easing the reduction of the public debt-to-GDP ratios in Member States. At the same time, financial conditions are currently particularly supportive: interest rates are at very low levels, even after adjusting for relatively low GDP growth, and contribute to alleviating the burden of debt servicing. In this context, the need to strengthen GDP growth, which would also improve public debt dynamics, calls for making use of all policy levers, including rebalancing fiscal policy in some Member States, and generally devoting particular attention to the quality of public finances and the implementation of structural reforms