German Chancellor Gerhard Schroeder and Luxembourg Premier Jean-Claude Juncker met here Friday to discuss reforms on the European Stability and Growth Pact.

Schroeder said after the meeting that they both welcomed and supported possible reforms of the pact.

He said Juncker, who is also current rotating president of the European Commission, was to put forward proposals to reform the pact in March.

Germany was ready to help with the work "without giving up specific German interests," said Schroeder. A compromise from all sides was needed in this issue, he noted.

The EU's stability pact should be loosened to allow countries to run a deficit beyond the current limit of three percent of GDP, Schroeder said earlier this week.

Schroeder said the criteria should not be applied mechanically, but that credible growth and labor policies should allow countries to run higher deficits.

They should be given leeway if they introduced costly structural reforms or were suffering from economic stagnation, Schroeder wrote.

He also argued that the EU should have less power to take action against countries offending the rules.

"The stability pact will work better if intervention by European institutions in the budgetary sovereignty of national parliaments is only permitted under very limited conditions," Schroeder said.

Source: Xinhua