European Union (EU) finance ministers started a two-day meeting here on Thursday, with an exit strategy to phase out economic stimulus dominating their first-day agenda.
"The economic situation is moving ahead to a tentative recovery. We will have to keep economic policy very expansionary for the coming period," Swedish Finance Minister Anders Borg, whose country holds the EU rotating presidency, told reporters before chairing the informing talks with his EU counterparts in the Swedish port city of Gothenburg.
"An exit strategy must obviously be discussed. We have to make a timely withdrawal of the temporary stimulus," he added.
One year after the outbreak of the financial crisis, the EU economy seemed to be at a turning point. Signs of improvement have become increasingly apparent since the start of the autumn, thanks to the fiscal stimulus measures implemented by EU governments.
However, the economic crisis and the unprecedented fiscal measures have put public finances under extraordinary stress.
After spending billions of euros to stimulate economic growth, almost all EU governments have seen their budget deficits swell beyond the EU limit of three percent of gross domestic product (GDP), and budget deficits are set to more than double in the EU.
This would become a burden for future generations and could weigh heavily on growth in a longer term, prompting EU governments to mull gradual withdrawal of fiscal stimulus and start to rein in deficits for long-term sustainability.
But the problem is when to implement exit strategies since the economic situation remains fragile and too soon withdrawal of fiscal and monetary stimulus may run the risk of undermining recovery.
Portuguese Finance Minister Fernando Teixeira dos Santos suggested EU member states may not have to follow the same timetable in phasing out stimulus.
"I think it is very difficult. I do not think that the implication of this international crisis is a symmetric one for each of the countries," he said.
Some of his colleagues said the time for implementation of exit strategy could be in 2011.
"Perhaps 2011 is an appropriate year, but we will have to wait a little bit. Now the recovery is not here. I think we should start a recovery in 2010, perhaps the second part of the year," said Spanish Economy Minister Elena Salgado.
Salgado's view was echoed by Belgian Finance Minister Didier Reynders.
"It is true that from the beginning of 2011, there will be time to go towards balanced budgets," he said.