FRANKFURT, Feb 4: The European Stability and Growth Pact, a tight set of budget rules for eurozone countries, can appear "too restrictive" during times of weak economic growth , the EU's commissioner for economic and monetary affairs Pedro Solbes said in an interview released on Wednesday.

In the pre-release of an interview to be published in the latest edition of the business weekly WirtschaftsWoche, Solbes was asked about the shortcomings of the stability pact, which puts tight limits on public spending in countries sharing the euro.

"After the experiences of the first five years (of monetary union), I want to improve the pact," Solbes said. "The stability pact has shortcomings and weaknesses. In economically difficult times, the pact seems too restrictive and sometimes the rules of the pact appear too rigid."

The 1997 pact stipulates that eurozone countries are not allowed to run up public deficits in excess of 3 per cent of gross domestic product at any point during the economic cycle.

But economic heavyweights France and Germany fell foul of that rule in 2002 and 2003 and look set to breach the 3 per cent limit again this year, sparking a Europe-wide crisis about the efficacy of the pact and an effective suspension of the stability pact rules.

"Of course countries whose public deficits exceed 3 per cent of GDP must save and cut back spending. If a country with a low debt ratio and a deficit ratio increases public investment to tackle structural problems, then a temporary increase in the deficit should be accepted," Solbes said.

"If a country is implementing substantial reforms and is consolidating public finances in the medium term, then we should take that into account in our assessments," Solbes said.

The commissioner acknowledged that the pact's rules could exacerbate a country's difficulties during economic hard times if governments had not done their homework beforehand.

"There is indeed some danger that the stability pact can have a procyclical effect if provisions are not made for downturns when the economy is faring well," he said.

The EU Commission has promised to put forward propositions for amending the pact during the course of February following the effective suspension of the pact.

Solbes comments echo remarks made by EU Commission President Romano Prodi who last month described the pact as a "static instrument" that "is not going to help growth."

The two men had already voiced support for an easing of the pact rules with a view to "combining (budgetary) discipline with growth considerations". But they have not so far revealed any details of such proposals.-AFP