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Spain, Germany upbeat on swift EU fiscal rules agreement

FILE PHOTO: European Union finance ministers meeting in Brussels

BERLIN (Reuters) - Spanish Economy Minister Nadia Calvino expressed hope an agreement on the reform of EU fiscal rules could be clinched as soon as Thursday evening, while her German counterpart said he thought a deal was possible this week.

EU finance ministers are discussing changes to the rules on Thursday and Friday, aiming to agree on a joint position that would then be negotiated with the European Parliament early in 2024. Spain holds the rotating presidency of the Council of the European Union.

"The presidency's proposal is balanced and reflects each of the positions in the council, and I am confident that we will be able to reach this political agreement tonight," Calvino told reporters before the meeting.

Germany's Christian Lindner said earlier he came to Brussels "in the knowledge that an agreement is possible and we also have the will to reach an agreement".

"Germany and France are now 90% in agreement on key issues," Lindner added.

French Finance Minister Bruno Le Maire said that while France and Germany agreed on most of the proposed changes, they still differed on the treatment of investment spending when the budget deficit is above EU limits.

Under EU rules, which set a limit of 3% of GDP on budget deficits and 60% of GDP on public debt, when a country breaches the deficit ceiling it must cut the deficit by 0.5% of GDP in structural terms every year until it is below 3% again. This obligation is called an "excessive deficit procedure".

France wants a smaller annual deficit reduction if a government makes reforms and invests under a medium-term plan of four years that would be negotiated with the European Commission. Germany wants more ambitious targets.

"We are convinced that excessive deficits must be reduced quickly and that more ambitious standards must be applied," Lindner said.

(Reporting by Maria Martinez, additional reporting by Emma Pinedo in Madrid; Editing by Rachel More, Miranda Murray and David Evans)