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Commission presents excessive deficit reports for five countries

12.05.2010 - Today the European Commission adopted reports under the corrective arm of the Stability and Growth Pact for Bulgaria, Cyprus, Denmark, Finland and Luxembourg.

What is the legal background?

Article 126 of the Treaty lays down an excessive deficit procedure (EDP). This procedure is further specified in Council Regulation (EC) No 1467/97, which is part of the Stability and Growth Pact. According to Article 126(2) of the Treaty, the Commission has to monitor compliance with budgetary discipline on the basis of two criteria, namely:

  • (a) whether the ratio of the planned or actual government deficit to gross domestic product (GDP) exceeds the reference value of 3% (unless either the ratio has declined substantially and continuously and reached a level that comes close to the reference value; or the excess over the reference value is only exceptional and temporary and the ratio remains close to 3%); and
  • (b) whether the ratio of government debt to GDP exceeds the reference value of 60% (unless the ratio is sufficiently diminishing and approaching the reference value at a satisfactory pace).

Which steps were taken under the excessive deficit procedure today?

In view of the actual breach of the reference value of 3% of GDP in 2009 by Bulgaria and Cyprus and the planned breach of the 3% by Denmark, Finland and Luxembourg in 2010, the European Commission today adopted reports under the corrective arm of the Stability and Growth Pact for all countries in question. Taking due account of the economic background and all other relevant factors, the reports examine whether the notified deficits remain close to the reference value and whether the excess is exceptional and temporary. The Commission concludes that these conditions are met only in the case of Luxembourg. On the four remaining cases the Commissions concludes that deficit criterion in the Treaty is not fulfilled.

Next steps

The reports are addressed to the Economic and Financial Committee, which formulates an opinion on the reports of the Commission. Taking into account the opinion of the Committee, the Commission will decide whether to recommend to the Council the existence of an excessive deficit (Articles 126.5 and 126.6 of the Treaty) and a deadline for its correction (Article 126.7). These follow-up steps will be discussed at the ECOFIN meeting of 6-7 July.

Documents

>> Press release IP/10/563 Commission presents excessive deficit reports for five countries Choose translations of the previous link 
>> Excessive deficit procedure. Bulgaria
>> Excessive deficit procedure. Cyprus
>> Excessive deficit procedure. Denmark
>> Excessive deficit procedure. Finland
>> Excessive deficit procedure. Luxembourg

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