The legal basis of the Stability and Growth Pact (SGP) is Articles 121 and 126 of the Treaty on the Functioning of the European Union (TFEU); Protocol 12 of the Treaty gives further details on the Excessive Deficit Procedure, including the reference values on deficit and debt. Art. 136 provides the legal basis for sanctions introduced in the 2011 reforms to the SGP. The SGP is governed by secondary legislation and supplemented by other texts.
The Commission proposed two draft regulations in November 2011 (the "two-pack"), which are nearing the end of the legislative process. The draft Regulations will enhance the coordination and surveillance for budgetary processes for all euro area Member States, and especially for those countries that have excessive deficits, that are experiencing or are at serious risk of financial instability, or that are under a financial assistance programme.