24.03.2010 - The European Commission today examined the updated stability and convergence programmes (SCPs) of the Czech Republic, Denmark, Hungary, Lithuania, Luxembourg, Latvia, Malta, Poland, Romania and Slovenia.
According to Council Regulation (EC) No 1466/97 on the strengthening of budgetary surveillance and the surveillance and coordination of economic policies, Member States must submit updated macroeconomic and budgetary projections every year. Such updates are called stability programmes in the case of countries that have adopted the euro, and convergence programmes otherwise. This regulation is also referred to as the 'preventive arm' of the Stability and Growth Pact.
This year's assessments have to be seen against the background of the sharp economic and financial crisis which has had a major impact on public finances. Reflecting the working of automatic stabilisers and discretionary stimulus measures implemented in line with the European Economic Recovery Plan (EERP) to cope with the exceptional economic circumstances, a large majority of Member States is currently subject to the excessive deficit procedure following corresponding Council decisions in 2009.
This implies that the medium-term budgetary strategies of these countries have to be assessed against the background of the recommendations to correct their excessive deficits by the deadlines set by the Council.
Of the countries assessed today, only Denmark and Luxembourg have kept their general government deficits below 3% in 2009, although their fiscal situation is set to deteriorate markedly in 2010.
For most countries this year will mark a fiscal consolidation process consistent with the recommendation set out in the Excessive deficit procedures (EDPs) and, in the case of Latvia, Hungary and Romania, with the conditions set out in the international financial assistance programmes.
As to the budgetary targets set out in the programmes, the growth assumptions underlying these projections are in several cases optimistic especially in outer years, while the budgetary consolidation strategy is often not sufficiently backed up by concrete measures from 2011 onwards.
Based on its assessment, the Commission has adopted recommendations for Council opinions on these programmes. They will be discussed at the ECOFIN meeting of 16-17 April together with recommendations for Council opinions on the programmes of the 14 countries that the Commission assessed on 17 March.