FRANKFURT, Oct 24: The European Central Bank (ECB) defended on Thursday the budgetary stability pact for the 12 nations using Europe’s single currency, calling it “indispensable” for monetary union.

In a statement, the ECB said that if some countries were having problems respecting the 1997 Stability and Growth Pact, which sets a limit of 3 per cent on budget deficits, then they, and not the rules, were to blame.

“Problems have arisen not because the rules are inflexible, but as a result of some countries’ unwillingness to honour their commitment to respect the rules,” it said.

“The results of fiscal policy in several countries are very disappointing,” the statement added.

The ECB said, “the main reason why countries are in budgetary difficulties at present is because they have not used the situation of higher growth to substantially improve their fiscal position.”

While it did not name any member country, the statement was a reference to Germany, France, Italy and Portugal, which all have clear budget deficits.—AFP