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- SGP Requirements The SGP sets two hard limits on EU member states: a state's budget deficit cannot exceed 3% of GDP and national debt cannot surpass 60% of GDP. In cases where a national debt exceeds 60% of the member state’s GDP, it must be declining at a reasonable pace to within acceptable limits to avoid incurring penalties.
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The Stability and Growth Pact (SGP) is a legal framework (based on primary and secondary EU law) that seeks to ensure sustainable public finances so as to contribute to the stability of the Economic and Monetary Union (EMU).
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The Stability and Growth Pact (SGP) is a set of rules designed to ensure that countries in the European Union pursue sound public finances and coordinate their fiscal policies.
- SECTION II - GUIDELINES ON THE FORMAT AND CONTENT OF STABILITY AND CONVERGENCE PROGRAMMES
- SECTION I
- ILD MB Euro max( MTO , / ERM 2 MTO , MTO )
- Fiscal behaviour over the cycle and adjustment path toward the MTO
- B. THE EXCESSIVE DEFICIT PROCEDURE
- Council
- GUIDELINES ON THE FORMAT AND CONTENT OF STABILITY AND CONVERGENCE PROGRAMMES
- of the
- Convergence
- Objectives and their implementation
- Assumptions and data
- Sensitivity analysis
- Updating of programmes
- 7. Institutional features of public finances
- Of which: age-related expenditures
- Total revenue
- Top-Down Assessment of Effective Action19
- Bottom-Up Assessment of Effective Action20
- 5. CONCLUSIONS
- ANNEX: Decision-Tree Used for Assessing Effective Action
- GDP
- GDP real
- 3.2. Refining the methodology
- Therefore, the following refined formula to compute the β component will be used:
- 4.1. The methodology.
- 4.2. The revenue side.
- 1) Simplifying the notation
- c) Derivation of the parameter
- 3. Structural Reforms
- 3.1 Criteria for eligible reforms
- 4. Government investments aiming at, ancillary to, and economically equivalent to the implementation of major structural reforms
Status of the programme and of the measures Content of Stability and Convergence Programmes
SPECIFICATIONS ON THE IMPLEMENTATION OF THE STABILITY AND GROWTH PACT
The MTO pursues a triple aim: providing a safety margin with respect to the 3% of GDP deficit limit. This safety margin is assessed for each Member State taking into account past output volatility and the budgetary sensitivity to output fluctuations. ensuring rapid progress towards sustainability. This is assessed against the need to ensure the c...
Member States should achieve a more symmetrical approach to fiscal policy over the cycle through enhanced budgetary discipline in periods of economic recovery, with the objective to avoid pro-cyclical policies and to gradually reach their medium-term budgetary objective, thus creating the necessary room to accommodate economic downturns and reduce ...
In line with the provisions of the Treaty, the Commission has to examine compliance with budgetary discipline on the basis of both the deficit and the debt criteria.
When considering whether an excessive deficit procedure should be abrogated, the Commission and the Council should take a decision on the basis of notified data. Moreover, the excessive deficit procedure should only be abrogated if the Commission forecasts indicate that: the deficit will not exceed the 3% of GDP threshold over the forecast horizo...
The Stability and Growth Pact requires Member States to submit Stability or Convergence Programmes, which are at the basis of the Council’s surveillance of budgetary positions and its surveillance and co-ordination of economic policies. The Council, on a recommendation from the Commission, and after consulting the Economic and Financial Committee, ...
Each programme mentions its status in the context of national procedures, notably whether the programme was presented to the national Parliament and whether there has been parliamentary approval of the programme. The programme also indicates whether the national Parliament had the opportunity to discuss the Council opinion on the previous programme...
In order to facilitate comparison across countries, Member States are expected, as far as possible, to follow the model structure for the programmes in Annex 1. The standardisation of the format and content of the programmes along the lines set below will substantially improve the conditions for equality of treatment. The quantitative information s...
Member States will present in their Stability and Convergence Programmes budgetary targets for the general government balance in relation to the MTO, and the projected path for the general government debt ratio. Convergence programmes shall also present the medium-term monetary policy objectives and their relationship to price and exchange rate sta...
Stability and Convergence programmes should be based on realistic and cautious macroeconomic forecasts. The Commission forecasts can provide an important contribution for the coordination of economic and fiscal policies. Member States are free to base their Stability/Convergence Programmes on their own projections. Budgetary planning shall be based...
Given the inevitability of forecast errors, Stability and Convergence Programmes include comprehensive sensitivity analyses and/or develop alternative scenarios, in order to enable the Commission and the Council to consider the complete range of possible fiscal outcomes. In particular, the programmes shall provide an analysis of how changes in the ...
In order to ensure proper ex ante coordination and surveillance of economic policies, submissions of Stability and Convergence Programmes should take place each year preferably by mid–April, but in any case not later than the end of April. The whole process should be completed with the adoption of Council Opinions on the programmes as a rule befo...
National budgetary rules Budgetary procedures, incl. public finance statistical governance Other institutional developments in relation to public finances
Pension expenditure Social security pension Old-age and early pensions Other pensions (disability, survivors) Occupational pensions (if in general government) Health care Long-term care (this was earlier included in the health care) Education expenditure Other age-related expenditures Interest expenditure
Of which: property income Of which: from pensions contributions (or social contributions if appropriate) Pension reserve fund assets Of which: consolidated public pension fund assets (assets other than government liabilities)
While the estimation of changes in the structural balance is intended to help identify genuine fiscal policy efforts on the part of Member States, its measurement is not problem-free. The purpose of the top down approach is to correct differential growth and revenue outturns relative to expectations at the time of Recommendation. First, potential...
While the top-down approach takes the change in the structural balance as a starting point, the bottom-up approach revolves around the actual fiscal policy measures the Member State has taken. This is done by estimating the budgetary impact of (new) measures the Member State has introduced to raise revenue21 and the savings it has made on public ex...
The methodology as summarised above and as described in detail in the attached note will from now on be used by the Commission when assessing effective action in the context of the Excessive Deficit Procedure.
Examination of: B and ΔS B ≥B R and ΔS ≥ ΔS R B
t where R , DM t t , and respectively stand for the level of government revenues, the level of discretionary revenues measures and the mechanical annual growth in revenue.
t current prices over the GDP at constant prices (this ratio being the price deflator of the nom
The implementation of the adjustment methodology has allowed the subtleties of its operation to be better understood. As a result of the experience gained, it was decided not to change the way in which potential output revisions are taken into account (i.e. the α correction). This section does, however, present the agreed two refinements to the met...
4. THE "BOTTOM-UP" APPROACH: METHODOLOGY Traditionally the fiscal effort has been measured using the so-called "top-down" approach, by computing the change in the structural balance. Accordingly, this approach has also been so far the centrepiece in the effective action assessment as described above. However, the "top-down" approach, by itself, do...
The "bottom-up" assessment of effective action aims at identifying the budgetary impact of the new fiscal measures implemented since the EDP recommendation was issued or since compliance with the EDP recommendation was last assessed: either of them, as appropriate in each case, is the cut-off date. While all measures implemented before that moment ...
Element (1) in the above formula represents the fiscal effort implemented on the revenue side and consists of the sum of the estimated budgetary impact of the additional discretionary revenue measures implemented in the period under scrutiny, that is as from the cut-off date. Its full description requires the specification of the following three ...
Under the preventive arm of the Pact, some investments aiming at, ancillary to, and economically equivalent to the implementation of major structural reforms may, under certain conditions, justify a temporary deviation from the MTO of the concerned Member State or from the adjustment path towards it.
Under the preventive arm of the Pact, some investments aiming at, ancillary to, and economically equivalent to the implementation of major structural reforms may, under certain conditions, justify a temporary deviation from the MTO of the concerned Member State or from the adjustment path towards it.
Under the preventive arm of the Pact, some investments aiming at, ancillary to, and economically equivalent to the implementation of major structural reforms may, under certain conditions, justify a temporary deviation from the MTO of the concerned Member State or from the adjustment path towards it.
Under the preventive arm of the Pact, some investments aiming at, ancillary to, and economically equivalent to the implementation of major structural reforms may, under certain conditions, justify a temporary deviation from the MTO of the concerned Member State or from the adjustment path towards it.
Under the preventive arm of the Pact, some investments aiming at, ancillary to, and economically equivalent to the implementation of major structural reforms may, under certain conditions, justify a temporary deviation from the MTO of the concerned Member State or from the adjustment path towards it.
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This document provides an overview of key developments under the preventive and corrective arms of the Stability and Growth Pact on the basis of the latest Commission and Council decisions and recommendations in the framework of the Stability and Growth Pact and the latest European Commission economic forecasts. This document is regularly updated.
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The Stability and Growth Pact is an essential part of the macroeconomic framework of the Economic and Monetary Union, which contributes to achieving macroeconomic stability in the EU and safeguarding the sustainability of public finances.
The Stability and Growth Pact (SGP) is an agreement, among all the 27 member states of the European Union, to facilitate and maintain the stability of the Economic and Monetary Union (EMU).
The Stability and Growth Pact (SGP) is a legal framework (based on primary and secondary EU law) that seeks to ensure sustainable public finances so as to contribute to the stability of the Economic and Monetary Union (EMU).
