Specifications on the implementation of the Stability and Growth Pact and guidelines on the format and content of stability and convergence programmes

Introduction

This opinion updates and replaces the opinion of the Economic and Financial Committee on the content and format of the stability and convergence programmes, endorsed by the Econ Council on 10 July 2001.

The Stability and Growth Pact fully entered into force on 1 January 1999 and consists of a rules-based framework with both preventive and corrective elements. It initially consisted of Council Regulation (EC) No 1466/97 of 7 July 1997 on the strengthening of the surveillance of budgetary positions and the surveillance and coordination of economic policies, Council Regulation (EC) No 1467/97 on speeding up and clarifying the implementation of the excessive decit procedure and the Resolution of 17 June 1997 on the Stability and Growth Pact. On 20 March 2005 the Council adopted a report entitled 'Improving the implementation of the Stability and Growth Pact'. The report was endorsed by the European Council in its conclusions of 22 March 2005, which stated that the report updates and complements the Stability and Growth Pact, of which it is now an integral part. On 27 June 2005 the Pact was complemented by two additional Regulations amending Regulations (EC) No 1466/97 and (EC) No 1467/97.

The Stability and Growth Pact is an essential part of the macroeconomic framework of economic and monetary union, which contributes to achieving macroeconomic stability in the EU and safeguarding the sustainability of public nances. A rules-based system is the best guarantee for commitments to be enforced and for all Member States to be treated equally. The two nominal anchors of the Stability and Growth Pact - the 3 % of GDP reference value for the decit ratio and the 60 % of GDP reference value for the debt ratio - and the medium-term budgetary objectives are the centrepiece of multilateral surveillance.

Member States, the Commission and the Council are committed to deliver on their respective responsibilities, applying the Treaty and the Stability and Growth Pact in an eective and timely manner. In addition, since eectiveness of peer support and peer pressure is an integral part of the Stability and Growth Pact, the Council and the Commission are expected to motivate and make public their positions and decisions at all appropriate stages of the procedure of the Stability and Growth Pact. Member States are expected to regularly inform the national Parliaments of developments in the procedures.

In order to enhance ownership of the EUbudgetary framework, national budgetary rules should be complementary to the Stability and Growth Pact. Without prejudice to the balance between national and Community competences, their implementation could be discussed at European level in the context of the stability and convergence programmes. In the same vein, governance arrangements at national level should complement the EU framework. National institutions could play a more prominent role in budgetary surveillance to enhance enforcement through national public opinion and complement the economic and policy analysis at EU level. In particular, Member States could establish an economic council of wise people who would advise on the main macroeco-nomic projections.

These guidelines for the implementation of the Stability and Growth Pact consist of two sections. The rst section elaborates on the implementation of the Stability and Growth Pact. The second section consists of guidelines on the content and format of the stability and convergence programmes.

Section I: Specifications on the Implementation of the Stability and Growth Pact

A. The Preventive Arm of the Stability and Growth Pact

1. The medium-term budgetary objective (MTO)

Definition of the MTO

The MTO is dened in cyclically adjusted terms, net of one-o and other temporary measures. The reference method for the estimation of potential output is the one adopted by the Council on 12 July 2002 47- One-o and temporary measures are measures having a transitory budgetary eect that does not lead to a sustained change in the intertemporal budgetary position

If you are already a vLex customer, Access Here