The International Monetary Fund (IMF) told EU finance ministers that the bloc needs reforms, fiscal consolidation, and possible joint borrowing to manage rising spending on defense, energy, and pensions.
Without policy changes, the average EU country's debt would reach 130% of GDP by 2040, the IMF warned in a paper presented at an informal meeting in Nicosia.
Proposed measures include improving labor mobility, integrating energy markets, pension reforms, and government guarantees for climate investments.
Joint debt remains controversial: some countries like Spain and Italy support it, while Germany and northern states oppose.
Eurogroup president Kyriakos Pierrakakis said discussions will continue in coming months.
The IMF urged a strategic response, noting that "muddling-through" has reached its limits.
