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Commission takes EDP steps for five countries and assesses remaining Stability and Convergence Programmes

The European Commission today proposed deadlines for the correction of the government deficits of Lithuania, Malta, Poland and Romania and proposed a new deadline for the correction of the excessive deficit for Hungary. It also examined the remaining stability and convergence programmes of Austria, Belgium, Romania, Slovenia and Slovakia.

Updated 24 June 2009.

What is the legal background?

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, 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. The EU budgetary surveillance framework implies, inter alia, that excessive deficits should be avoided. The excessive deficit procedure (EDP), as the "corrective arm" of the Pact, is regulated by Article 104 of the Treaty and further specified in Council Regulation 1467/97.

Which steps were taken under the excessive deficit procedure today?

Based on the April notifications of the fiscal outcomes for 2008, the Commission today concludes that Lithuania, Malta, Poland and Romania are running excessive deficits. It recommends the Council to decide in line with this opinion and make recommendations for bringing these situations to an end. As for Hungary, in view of the exceptional situation characterised by the depth of the current recession and the fragility of the financial sector, the Commission recommends to the Council to adopt a revised recommendation under Article 104.7 setting a new deadline for the correction of the deficit. Deadlines are proposed depending on the fiscal starting point and the scope for manoeuvre in line with the European Economic Recovery Plan (EERP), the economic outlook, macroeconomic imbalances and financing conditions. As a result, the proposed deadlines are 2010 for Malta, 2011 for Hungary, Lithuania and Romania, and 2012 for Poland.

What is the assessment of the remaining 2008/09 stability and convergence programmes?

As for most EU countries, budgetary positions in Austria, Belgium, Romania, Slovenia and Slovakia are estimated to deteriorate markedly, reflecting the ongoing recession and the economic stimulus packages adopted in line with the EERP that called for timely and targeted fiscal measures in Member States with fiscal room for manoeuvre. In all five countries, the specified budgetary targets are also found to be subject to downside risks. Based on its assessment, the Commission has adopted recommendations for Council opinions on the five programmes.

Next steps

The Ecofin Council is expected to discuss the recommendations at the upcoming July gathering. As to the excessive deficit procedure, the Member States concerned will then have six months to indicate what action they intend to take to progressively reduce the budget deficit.

Documents


>> Press release Choose translations of the previous link 

Commission services' assessment of the updated stability programmes for Austria, Belgium, and Slovakia and the updated convergence programme of Romania:



Art. 104(5) Commission opinion on the existence of an excessive deficit for Lithuania, Malta, Poland and Romania:



Commission assessment in relation to the commission recommendation for a Council decision and recommendation under Articles 104(6) and 104(7) of the Treaty for Lithuania, Malta, Poland and Romania:



Commission assessment in relation to the Commission recommendation for a Council recommendation under Article 104(7) of the Treaty for Hungary: