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Commission presents reports under the excessive deficit procedure for four countries

The reports under the corrective arm of the Stability and Growth Pact were adopted for Lithuania, Malta, Poland and Romania.

13/5/2009.

What is the legal background?

Article 104 of the Treaty  lays down an excessive deficit procedure (EDP). This procedure is further specified in Council Regulation (EC) No 1466/97, which is part of the Stability and Growth Pact.

According to Article 104(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 reported budget deficits of more than 3% in 2008, the European Commission adopted reports for Lithuania, Malta, Poland and Romania in accordance with Article 104.3 of the Treaty.

The reports analyse the reasons for the breach of the 3% reference value in 2008, taking due account of the economic background and all other relevant factors. Examining whether the deficit criterion in the Treaty was fulfilled, i.e. whether the deficit remained close to the reference value and the excess was only exceptional and temporary, the Commission concludes that, in all cases, the deficit criterion is not fulfilled.

On 18 February, the Commission had already initiated excessive deficit procedures for France, Greece, Ireland, Latvia and Spain.

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 104.5 and 104.6 of the Treaty) and a deadline for its correction (Article 104.7).

Documents

>> Reports prepared in accordance with Article 104(3) of the Treaty