At a press conference today in Brussels, Executive Vice President Dombrovskis and Commissioner Gentiloni will present the reform of the Stability Pact
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The proposed reform of the EU Stability Pact provides for safeguard measures on debt sustainability.
The reference values of 3% and 60% of GDP for deficit and debt remain unchanged.
At the end of the spending plan agreed by each state for the medium term (4 years), the ratio between public debt and GDP will have to be lower.
A minimum budget adjustment of 0.5% of GDP per year is then envisaged as long as the deficit remains above 3%.
The 0.5% adjustment 'safeguard' will be independent of the launch of an excessive deficit procedure.
The EU Commission lifts the veil on the proposal to reform economic governance.
States will indicate medium-term objectives (4 years) on how they intend to address macroeconomic imbalances and reforms, indicating only one expenditure indicator.
These plans, which can be extended by 3 years, will be evaluated by the Commission and approved by the Council.
States with a deficit over 3% of GDP or debt over 60% of GDP will have to ensure that the debt has a plausible decline or remains prudent in the plan and that the deficit falls or remains below 3% in the medium term: the executive speaks of it as a "technical trajectory".
The EU economic governance reform proposals "promote greater national ownership through medium-term fiscal structural plans prepared by the member states, within a common EU framework with sufficient guarantees".
This was stated by EU Economy Commissioner Paolo Gentiloni.
They guarantee "simultaneously equal treatment and consideration of the specific situations of individual countries".
The rules will allow "a more credible application" by giving "the Member States more room for maneuver in defining budgetary trajectories".
The proposed reform of the EU Stability Pact takes "in consideration the different initial budgetary positions of the Member States and their different challenges in terms of public debt".
"By focusing on spending, we also avoid the typical pro-cyclical bias that fiscal policy has had in recent years."
This was stated by EU Economy Commissioner Paolo Gentiloni.
The EU economic governance reform proposals "will facilitate reforms and investment commitments, supported by an adjustment path".
"They should foster growth, support fiscal sustainability and address common EU priorities."
This was stated by EU Economy Commissioner Paolo Gentiloni.
“They should ensure that the overall level of nationally funded public investment over the life of the plan is higher than in the previous period. And this is obviously a very significant innovation compared to the current framework.”
The EU Commission's proposal to reform the Stability Pact confirms the possibility of activating general safeguard clauses in the event of a severe economic recession in the EU or in the euro area which will allow deviation from spending targets.
Country-specific safeguard clauses will also be foreseen in case of exceptional circumstances beyond the control of the Member State with a material impact on public finances.
The Council, on the basis of a recommendation from the Commission, will decide on the activation and deactivation of these clauses.