|European Commission: DG Economic and Financial Affairs
|COM (2023) 241
Legislative initiative tabled by the European Commission on 26 April 2023, introducing amendments to Regulation (EC) No 1467/97 concerning the implementation of the Excessive Deficit Procedure (EDP).
The Stability and Growth Pact (SGP) is the cornerstone of the European Union's (EU) budgetary discipline. The corrective arm of the Pact governs the Excessive Deficit Procedure (EDP) which underpins the prompt correction of excessively high public deficits or excessively high public debt. Regulation (EC) No 1467/97 is included in the SGP and it seeks to clarify and speed up the EDP. This framework was later amended by Regulation (EU) No 1175/2011 to take into account the lessons of the global financial crisis and the Euro area sovereign debt crisis, as part of the so-called Six-Pack.
Article 17a of Regulation (EC) No 1467/97 contains a review clause whereby every five years the European Commission is required to publish a report on the application of the Regulation. The latest review was carried out as part of a wider review of the EU's economic governance framework launched in 2020. The review revealed a number of strengths and shortcomings, in particular an increased complexity, the need to be more effective in reducing debt where it is high and build buffers for future shocks, and the need to update a number of instruments and procedures so as to integrate the lessons learned from the policy responses to the latest economic shocks.
In November 2022, the Commission put forward its orientations for a reform of the EU's economic governance framework. These envisaged a stronger national ownership, a simplified framework and a move towards a great medium-term focus, combined with stronger and more coherent enforcement. The draft law retains the rules for the opening and closing of an EDP for breaches of the 3% GDP deficit reference value, with some adjustments to ensure consistency with the EDP for breaches of the debt criterion, which would be strengthened for both activation and abrogation.
The proposed Council Regulation was adopted by the European Commission on 26 April 2023 as part of a legislative package seeking to reform the EU's fiscal framework. The European Parliament's relevant committee adopted its report on the draft law on 11 December. The Council of the European Union adopted its general approach to the text on 21 December. In the framework of the special consultation procedure, an informal agreement between the two institutions on the text for the draft law was reached on 10 February 2024.
|Economic and Financial Affairs
|Economic and Monetary Union [EMU], Economic Governance | Situation
|Public Debt, Stability and Growth Pact [SGP]
|European Union [EU]