The European Commission today concluded that Latvia is running an excessive deficit under Article 104.7 of the EU Treaty and proposed a deadline for its correction.
updated 2 July 2009
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 Stability and Growth Pact, is regulated by Article 104 of the Treaty and further specified in Council Regulation 1467/97.
Based on the April notification of the fiscal outcome for 2008, the Commission today concludes that Latvia is running an excessive deficit. It recommends the Council to decide in line with this opinion and make recommendations for bringing this situation to an end by 2012. The deadline is consistent with Latvia's ongoing process of economic and budgetary adjustment and its medium-term euro adoption aim, which is the anchor of the budgetary adjustment strategy.
The ECOFIN Council is expected to discuss the recommendations, together with those addressed on 24 June to Hungary, Lithuania, Malta, Poland and Romania at its 7 July gathering. The Member States concerned will then have six months to indicate what action they intend to take to progressively reduce the budget deficit.