BRUSSELS, (Reuters) – Eurozone finance ministers announced Monday that they will gradually change their fiscal policy from supportive in this year to neutral by 2023. This was according to Paschal Donohoe, chairman of the ministers.

Since 2020 when the COVID-19 pandemic sank the 19 Euro-zone countries and plunged the world economy into deep recession, the countries of the Euro zone have supported their economies using public money.

However, with growth returning and inflation at an all-time high, it no longer makes sense to stimulate the economy in a blanket fashion, the ministers said. Instead, they recommend focusing on providing targeted, selective support when needed.

Donohoe stated that fiscal strategy must be flexible and adaptable to the unfolding events at a news conference. He also said that the Russian invasion invading Ukraine on February 24 had created more uncertainty which required enough flexibility.

He said, “But we will gradually shift from supportive fiscal policies this year to neutral next.”

This policy shift declaration is a repeat of a March pledge. It comes after the European Commission suggested that borrowing limits be kept suspended by the EU for an additional year in 2023 in order to allow governments to address the consequences of war in Ukraine.

He said that the proposal by the Commission to suspend the borrowing limit for an additional year was a significant development.

Paolo Gentiloni, the Economics Commissioner, stated that due to war in Ukraine, euro zone growth is likely to reach 2.7% instead of 4.0% as predicted. A statistical carryover of 2021 would account for around three quarters.

This outlook has high uncertainties and risks. Our economy is far from being in a state of economic normality. He stated that this was why they decided to extend the suspension of borrowing limits through 2023.