|Treaty on Stability, Coordination and Governance in the Economic and Monetary Union|
|Drafted||30 January 2012(treaty finalised)|
|Signed||2 March 2012|
|Effective||1 January 2013|
|Condition||Ratified by twelve eurozone states|
|Signatories||25 EU member states (all except Croatia and Czech Republic) including all 20 eurozone states|
|Parties||27 states (all EU member states) |
|Depositary||General Secretariat of the Council of the EU|
|Languages||22 (All EU languages except Croatian & Czech)|
|Treaty on Stability, Coordination and Governance in the Economic and Monetary Union at Wikisource|
The Treaty on Stability, Coordination and Governance in the Economic and Monetary Union; also referred to as TSCG, or more plainly the Fiscal Stability Treaty is an intergovernmental treaty introduced as a new stricter version of the Stability and Growth Pact, signed on 2 March 2012 by all member states of the European Union (EU), except the Czech Republic and the United Kingdom. The treaty entered into force on 1 January 2013 for the 16 states which completed ratification prior to this date. As of 3 April 2019, it had been ratified and entered into force for all 25 signatories plus Croatia, which acceded to the EU in July 2013, and the Czech Republic.
The Fiscal Compact is the fiscal chapter of the Treaty (Title III). It binds 22 member states: the 20 member states of the eurozone, plus Bulgaria, Denmark and Romania, who have chosen to opt in. It is accompanied by a set of common principles.
Member states bound by the Fiscal Compact have to transpose into national legal order the provisions of the Fiscal Compact. In particular, national budget has to be in balance or surplus, under the treaty's definition. An automatic correction mechanism has to be established to correct potential significant deviations. A national independent monitoring institution is required to provide fiscal surveillance. The treaty defines a balanced budget as a general budget deficit not exceeding 3.0% of the gross domestic product (GDP), and a structural deficit not exceeding a country-specific Medium-Term budgetary Objective (MTO) which at most can be set to 0.5% of GDP for states with a debt‑to‑GDP ratio exceeding 60% – or at most 1.0% of GDP for states with debt levels within the 60%-limit. The country-specific MTOs are recalculated every third year, and might be set at levels stricter than the greatest latitude permitted by the treaty. The treaty also contains a direct copy of the "debt brake" criteria outlined in the Stability and Growth Pact, which defines the rate at which debt levels above the limit of 60% of GDP shall decrease.
If the budget or estimated fiscal account for any ratifying state is found to be noncompliant with the deficit or debt criteria, the state is obliged to rectify the issue. If a state is in breach at the time of the treaty's entry into force, the correction will be deemed to be sufficient if it delivers sufficiently large annual improvements to remain on a country specific predefined "adjustment path" towards the limits at a midterm horizon. Should a state suffer a significant recession, it will be exempted from the requirement to deliver a fiscal correction for as long as it lasts.
Despite being an international treaty outside the EU legal framework, all treaty provisions function as an extension to existing EU regulations, utilising the same reporting instruments and organisational structures already created within EU in the three areas: Budget discipline enforced by Stability and Growth Pact (extended by Title III), Coordination of economic policies (extended by Title IV), and Governance within the EMU (extended by Title V). The treaty states that the signatories shall attempt to incorporate the Fiscal Compact into the EU's legal framework, on the basis of an assessment of the experience with its implementation, by 1 January 2018 at the latest.[needs update]
Monetary policy in the eurozone (the EU countries which have adopted the Euro) is determined by the European Central Bank (ECB). Thus, the setting of central bank interest rates and monetary easing is in the sole domain of the ECB, while taxation and government expenditure remain mostly under the control of national governments, within the balanced budget limits imposed by the Stability and Growth Pact. The EU has a monetary union but not a fiscal union.
In October 2007, then ECB president, Jean-Claude Trichet, emphasised the need for the European Union (EU) to pursue further economic and financial integration within certain areas (among others, labour mobility and flexibility and reaching retail banking convergence). If these fiscal policies were adhered to by all member states, the ECB believed that this would increase their competitiveness. In June 2009, recommendations were published by The Economist magazine which suggested that Europe establish a fiscal union comprising a: "Bailout fund, banking union, mechanism to ensure the same prudent fiscal and economic policies were pursued equally by all states, and common issuance of eurobonds". Angel Ubide from the Peterson Institute for International Economics joined this view, suggesting that long-term stability in the eurozone required a common fiscal policy rather than controls on portfolio investment.
Further information: European sovereign-debt crisis
Starting from early 2010, the proposal to create a much greater fiscal union, at least in the eurozone, was considered by many[vague] to be either the natural next step in European integration, or a necessary solution to the 2010 European sovereign debt crisis. Combined with the EMU, a fiscal union would, according to the authors of the Blueprint report, lead to much greater economic integration. However, the process of building a fiscal union is envisaged by them to be a long-term project. The presidents of the ECB, Commission, Council and Eurogroup published a blueprint for a deep and genuine EMU in November 2012, outlining the elements of a fiscal union which could be achieved in the short, medium and long-term. For the short term (0–18 months), only proposals within the existing competences of the EU treaties were considered, while more wide-reaching proposals requiring treaty amendments were only considered for longer time frames.
The blueprint report mentioned that the potential introduction of a common issuance of eurobills with 1-year maturity could be implemented in the medium term (18 months – 5 years ahead), while eurobonds with 10-year maturity could be implemented as the final step in the long term (more than 5 years ahead). According to the authors of the Blueprint report, each step the EU take towards the sharing of common debt, the first of which is envisaged to include joint guarantees for debt repayment in conjunction with either a "debt redemption fund for excessive debt" or "issuance of some short-term eurobills", will need to be accompanied by increased coordination and harmonization of fiscal and economic policies in the eurozone. As such, the two reforms of the Stability and Growth Pact known as the sixpack (which entered into force December 2011) and twopack (planned entry into force in summer 2013), and the European Fiscal Compact (a treaty which largely mirrors these two EU reforms), represents, according to the authors of the Blueprint report, the first step towards the increased sharing and adherence to the same fiscal rules and economic policies, which they argue potentially paves the way for ratification in the medium term of a new EU treaty allowing for the common issuance of eurobills.
In March 2010, Germany presented a series of proposals to address the ongoing European sovereign debt crisis. They emphasised that the intention was not to establish a fiscal union in the short term, but to make the monetary union more resilient to crisis. They argued that the previous Stability and Growth Pact needed to be reformed to become more strict and efficient, and in return a European emergency bailout fund should be founded to assist states in financial difficulties, with bailout payments available under strict corrective fiscal action agreements – subject to approval by the ECB and Eurogroup. In case a non-collaborating state with an Excessive Deficit Procedure (EDP) breached the called for adjustment path towards compliance, it should risk being fined or lose its payment of EU cohesion funds and/or lose its political voting rights in the Eurogroup. A call was also made to enforce the Coordination of economic policies between eurozone members, so that all states take an active part in each other's policymaking. Throughout the following three years, these German proposals materialised into new European agreements or regulations after negotiations with the other EU member states.
The envisaged emergency bailout fund European Financial Stability Facility (EFSF) was the first proposal to become agreed to by the EU member states on 9 May 2010, with the facility being fully operational on 4 August 2010.
As a part of the proposed reform of the Stability and Growth Pact, Germany also presented a proposal in May 2010 that all Eurozone states should be obliged to adopt a balanced budget framework law into its national legislation, preferably at the constitutional level, with the purpose of guaranteeing future compliance with the pacts promise of having a clear cap on new debt, strict budgetary discipline and balanced budgets. Implementation of the proposed debt brake was by-itself envisaged to imply much tighter fiscal discipline compared to the existing EU rules requiring deficits not to exceed 3% of GDP. This proposal was later adopted as part of both the Fiscal Compact and Twopack regulations.
In late 2010, proposals were made to reform some rules of the Stability and Growth Pact to strengthen fiscal policy co-ordination. In February 2011, France and Germany had proposed the 'Competitiveness Pact' to strengthen economic co-ordination in the eurozone. Spain also endorsed the proposed pact. German Chancellor Angela Merkel has also verbally championed the idea of a fiscal union, as have various incumbent European finance ministers and the head of the European Central Bank.
In March 2011, a new reform of the Stability and Growth Pact was initiated, aiming at strengthening the rules by adopting an automatic procedure for imposing penalties in case of breaches of either the deficit or the debt rules.
By the end of 2011, Germany, France and some other smaller EU countries went a step further and vowed to create a fiscal union across the eurozone with strict and enforceable fiscal rules and automatic penalties embedded in the EU treaties. German chancellor Angela Merkel also insisted that the European Commission and the Court of Justice of the European Union must play an "important role" in ensuring that countries meet their obligations.
In that perspective, strong European Commission "oversight in the fields of taxation and budgetary policy and the enforcement mechanisms that go with it could further infringe upon the sovereignty of eurozone member states". Think-tanks such as the World Pensions Council (WPC) have argued that a profound revision of the Lisbon Treaty would be unavoidable if Germany were to succeed in imposing its economic views, as stringent orthodoxy across the budgetary, fiscal and regulatory fronts would necessarily go beyond the treaty in its current form, thus further reducing the individual prerogatives of national governments.
On 9 December 2011 at the European Council meeting, all 17 members of the eurozone agreed on the basic outlines of a new intergovernmental treaty to put strict caps on government spending and borrowing, with penalties for those countries who violate the limits. All other non-eurozone countries except the United Kingdom said they were also prepared to join in, subject to parliamentary vote. Originally EU leaders planned to change existing EU treaties but this was blocked by British prime minister David Cameron, who demanded that the City of London be excluded from future financial regulations, including the proposed EU financial transaction tax, thus a separate treaty was then envisaged, outside the formal EU institutions, as it had been with the first Schengen treaty in 1985.
On 30 January 2012 after several weeks of negotiations, all EU leaders except those from United Kingdom and Czech Republic endorsed the final version of the fiscal pact at the European summit in Brussels, though the treaty was left open to accession by any EU member state and Czech prime minister Petr Nečas said his country may join in the future. The treaty only becomes binding on the non-eurozone signatory states after they adopt the euro as their currency, unless they declare their intention to be bound by part, or all, of the treaty at an earlier date. The new treaty was signed on 2 March and will come into force on 1 January 2013, if it has been ratified (which requires the approval of national parliaments) by at least 12 countries that use the euro. Ireland held a referendum on the treaty on 31 May 2012, which was approved by 60.3%.
EU countries that signed the agreement will have to ratify it by 1 January 2013. Once a country has ratified the Treaty it has another year, until 1 January 2014, to implement a balanced budget rule in their binding legislation. Only countries with such rule in their legal code by 1 March 2013 will be eligible to apply for bailout money from the European Stability Mechanism (ESM).
Although the European Fiscal Compact was negotiated between 25 of the then 27 member states of the EU, it is not formally part of European Union law. It does, however, contain a provision to attempt to incorporate the pact into EU law within five years of its entering into force, i.e. January 2018.
An updated EMU reform plan issued in June 2015 by the five presidents of the council, European Commission, ECB, Eurogroup and European Parliament outlined a roadmap for integrating the Fiscal Compact and Single Resolution Fund agreement into the framework of EU law by June 2017, and the intergovernmental European Stability Mechanism by 2025. A proposal by the European Commission to incorporate the substance of the Fiscal Compact into EU law was published in December 2017.
The treaty is divided into 6 titles. The first explains that the aim of the treaty is to "strengthen the economic pillar of the economic and monetary union" and that the treaty should be fully binding on Eurozone countries. Title II defines its relation to EU laws and the Treaties of the European Union, applying the Fiscal Compact only "insofar as it is compatible". Title VI contains the final clauses regarding ratification and entry into force.
Three Titles (III-V) contain rules regarding fiscal discipline, coordination and governance.
Bt + Ct + Ct-1 + Ct-2
Yt-3 * (1 + Ypott)(1 + Pt) * (1 + Ypott-1)(1 + Pt-1) * (1 + Ypott-2)(1 + Pt-2)
The Fiscal Compact supplements pre-existing EU regulations for the Stability and Growth Pact (extended by Title III), coordination of economic policies (extended by Title IV), and governance within the EMU (Title V formalises a regulation for the existing Euro summit meetings of Eurozone members). Finally a tie exists to the European Stability Mechanism, which requires its Member States to have ratified and implemented the Fiscal Compact into national law as a pre-condition for receiving financial support.
Main article: Stability and Growth Pact
The fiscal provisions introduced by the Fiscal Compact treaty (for those states legally bound by these measures) function as an extension to the Stability and Growth Pact (SGP) regulation. The SGP regulation applies to all EU member states, and has been designed to ensure that each state's annual budgetary plans are compliant with the SGP's limits for deficit and debt (or debt reduction). Compliance is monitored by the European Commission and by the council. As soon as a Member State is considered to breach the 3% budget deficit ceiling or does not comply with the debt-level rules, the Commission initiates an Excessive Deficit Procedure (EDP) and submits a proposal for counter-measures for the member state to correct the situation. The counter measures will only be outlined in general, identifying the size and the time-frame of the needed corrective action to be undertaken, while taking into consideration country-specific risks for fiscal sustainability. Progress towards and respect of each specific state's Medium-Term budgetary Objective (MTO) shall be evaluated on the basis of an overall assessment with the structural balance as a reference, including an analysis of expenditure net of discretionary revenue measures. If a eurozone member state repeatedly breaches its "adjustment path" towards respecting the state's MTO and the fiscal limits outlined by the SGP, then the Commission may fine the state a percentage of its GDP. Such fines can only be rejected if the Council subsequently votes against the fine with a qualified 2/3 majority. EU member states outside the eurozone cannot be fined for breaches of the fiscal rules.
In December 2012, Finland became the twelfth eurozone state to ratify the treaty, thus triggering its entry into force on 1 January 2013. For subsequent ratifiers, entry into force is on the first day of the month following their deposit of the instrument of ratification. Slovakia became a party to the treaty on 1 February 2013, as did Hungary, Luxembourg and Sweden on 1 June 2013, Malta on 1 July 2013, Poland on 1 September 2013, the Netherlands on 1 November 2013, Bulgaria on 1 February 2014 and the last signatory Belgium on 1 April 2014. The non-eurozone countries Denmark and Romania have declared themselves to be bound in full, while Bulgaria declared itself bound by Title III. Latvia became bound by the fiscal provision on 1 January 2014 when it adopted the euro. Croatia, which acceded to the EU in July 2013, also acceded to the Fiscal Compact on 7 March 2018, as did the Czech Republic on 3 April 2019.
The ratification processes is summarised in the table below. 25 countries submitted laws for ratification of the treaty according to a standard parliamentary ratification procedure. In Cyprus, ratification was performed by a governmental decree without involving the parliament. In Ireland, a referendum was held to approve a constitutional amendment that empowered the government to ratify the treaty.
|Austria[a]||Yes||4 July 2012||Federal Council||50%||103||60||0||30 July 2012|||
|6 July 2012||National Council||50%||42||13||0|||
|17 July 2012||Presidential Assent||–||Granted|||
|Belgium[a]||Yes||23 May 2013||Senate||50%||49||9||2||28 March 2014|||
|20 June 2013||Chamber of Representatives||50%||111||23||0|||
|18 July 2013||Royal Assent (Federal law)||–||Granted|||
|20 December 2013||
|14 October 2013||German-speaking Community||50%||19||5||0|||
|21 December 2013||French Community||50%||66||1||1|||
|20 December 2013||Brussels Regional Parliament||50%||62||10||2|||
|20 December 2013||
|19 December 2012||
|20 December 2013||COCOF Assembly||50%||56||3||1|||
|Bulgaria[c]||Yes||28 November 2013||National Assembly||50%||109||0||5||14 January 2014|||
|3 December 2013||Presidential Assent||–||Granted|||
|Croatia||No||26 January 2018||Parliament||114||0||10||7 March 2018|||
|31 January 2018||Presidential Assent||–||Granted|||
|Czech Republic||No||Did not conclude||Chamber of Deputies (Sobotka)||60%[d]||3 April 2019|||
|27 August 2014||Senate (Sobotka)||60%[d]||58||10||5|||
|Did not conclude||Presidential Assent (Sobotka)||–|||
|1 November 2018||Chamber of Deputies (Babiš)||50%||106||43||4|||
|20 December 2018||Senate (Babiš)||50%||34||7||11|||
|6 March 2019||Presidential Assent (Babiš)||–||Granted|||
|Cyprus[a]||Yes||20 April 2012||Council of Ministers||–||Approved||26 July 2012|||
|29 June 2012||Presidential Assent||–||Granted|||
|Denmark[e]||Yes||31 May 2012||Folketing||50%||80||27||0||19 July 2012|||
|18 June 2012||Royal Assent||–||Granted|||
|Estonia[a]||Yes||17 October 2012||Riigikogu||50%||63||0||0||5 December 2012|||
|5 November 2012||Presidential Assent||–||Granted|||
|Finland[a]||Yes||18 December 2012||Parliament||50%||139||38||1||21 December 2012|||
|21 December 2012||Presidential Assent||–||Granted|||
|France[a]||Yes||11 October 2012||Senate||50%[f]||307 (91%)||32 (9%)||8||26 November 2012|||
|9 October 2012||National Assembly||50%[f]||477 (87%)||70 (13%)||21|||
|22 October 2012||Presidential Assent||–||Granted|||
|Germany[a]||Yes||29 June 2012||Bundesrat||66.7%||65||0||4||27 September 2012|||
|29 June 2012||Bundestag||66.7%||491||111||6|||
|13 September 2012||Presidential Assent||–||Granted|||
|Greece[a]||Yes||28 March 2012||Parliament||50%||194||59||0||10 May 2012|||
|Hungary||Yes||25 March 2013||National Assembly||66.7%||307||32||13||15 May 2013|||
|29 March 2013||Presidential Assent||–||Granted|||
|Ireland[a]||Yes||20 April 2012||Dáil||50%||93||21||N/A||14 December 2012|||
|24 April 2012||Senate||50%||Approved|||
|31 May 2012||Referendum||50%||60.3%||39.7%||N/A|||
|27 June 2012||Presidential Assent||–||Granted|||
|Italy[a]||Yes||12 July 2012||Senate||66.7%||216||24||21||14 September 2012|||
|19 July 2012||Chamber of Deputies||66.7%||368||65||65|||
|23 July 2012||Presidential Assent||–||Granted|||
|Latvia[a]||Yes||31 May 2012||Parliament||66.7%[g]||67 (69%)||29 (30%)||1 (1%)||22 June 2012|||
|13 June 2012||Presidential Assent||–||Granted|||
|Lithuania||Yes||28 June 2012||Seimas||50% and
min. 57 yes votes
|80||11||21||6 September 2012|||
|4 July 2012||Presidential Assent||–||Granted|||
|Luxembourg[a]||Yes||27 February 2013||Chamber of Deputies||66.7%[h]||46||10||0||8 May 2013|||
|29 March 2013||Grand Ducal Assent||–||Granted|||
|Malta[a]||Yes||11 June 2013||House of Representatives||50%||Unanimously||28 June 2013|||
|Netherlands[a]||Yes||25 June 2013||Senate||50%||Approved without vote[i]||8 October 2013|||
|26 March 2013||House of Representatives||50%||112||33||0|||
|26 June 2013||Royal Assent||–||Granted|||
|Poland||Yes||20 February 2013||Sejm||50%[j]||282||155||1||8 August 2013|||
|21 February 2013||Senate||50%[j]||57||26||0|||
|24 July 2013||Presidential Assent||–||Granted|||
|Portugal[a]||Yes||13 April 2012||Assembly||50%||204||24||2||5 July 2012|||
|27 June 2012||Presidential Assent||–||Granted|||
|Romania[e]||Yes||21 May 2012||Senate||50%[k]||89||1||0||6 November 2012|||
|8 May 2012||House of Representatives||50%[k]||237||0||2|||
|13 June 2012||Presidential Assent||–||Granted|||
|Slovakia[a]||Yes||18 December 2012||National Council||50%
min.76 yes votes[l]
|138||0||2||17 January 2013|||
|11 January 2013||Presidential Assent||–||Granted|||
|Slovenia[a]||Yes||19 April 2012||National Assembly||50%||74||0||2||30 May 2012|||
|30 April 2012||Presidential Assent||–||Granted|||
|Spain[a]||Yes||18 July 2012||Senate||50%||240||4||1||27 September 2012|||
|21 June 2012||Congress of Deputies||50%||309||19||1|||
|25 July 2012||Royal Assent||–||Granted|||
|Sweden||Yes||7 March 2013||Riksdagen||50%||251||23||37||3 May 2013|||
|= Eurozone parties bound by all treaty provisions|
|= Non-eurozone parties bound by all treaty provisions|
|= Non-eurozone parties bound by all fiscal provisions but none of the economic provisions|
|= Non-eurozone parties not bound by any of the fiscal or economic provisions|
After a country has completed its domestic ratification, it must deposit an instrument of ratification with the depositary (the General Secretariat of the Council of the European Union) to complete the process. If a legal complaint is filed with a constitutional court, this can delay the deposit and ratification, or even stop it if the court upholds the complaint. The list below summarises the progress of the ratification process.
The provisions regarding governance (Title V) are applicable to all signatories since the treaty's entry into force on 1 January 2013. For eurozone members that ratify, the treaty applies in full, pursuant to article 14. Non-eurozone countries will automatically become bound by all treaty provisions the moment they adopt the euro. Prior to that, only Title V applies to them, unless they by their own initiative make a declaration to the depositary "to be bound at an earlier date by all or part of the provisions in Titles III and IV".
The applicability of the treaty's provisions to each country is summarized in the table below. The last column of the table reflects the status of compliant implementation laws, and denotes whether the Title III provisions (the "balanced budget rule" and "automatic correction mechanism") have been embedded into national legislation through an ordinary law subject to later revisions by simple majority, or also by a constitutional amendment of which later revisions will require a higher constitutional majority. The background color of the last column indicates whether or not the implementation law of the state is compliant with Title III, where green indicates compliance, while yellow and red indicate that existing national fiscal rules are non-compliant. As of January 2015, the compliance assessments are only based on unofficial sources and/or assessments made by a parliamentary committee of the concerned state. The first official independent assessment of the treaty compliance of the listed national implementation laws has been scheduled to be conducted by the European Commission in September 2015, for each of the states bound by the fiscal provisions (Title III).
The European Commission adopted in February 2017 a report on the transposition across the 22 Member States concerned
|State||Sections applied||Governance provisions
|Fiscal and economic provisions
(Titles III and IV)
|Implementation law for enforcement|
of Title III provisions
|Austria||full (eurozone)||1 January 2013||1 January 2013||Ordinary law|
|Cyprus||full (eurozone)||Ordinary law|
|Estonia||full (eurozone)||Ordinary law|
|France||full (eurozone)||Organic law|
|Finland||full (eurozone)||Ordinary law|
|Germany||full (eurozone)||Constitutional law|
|Greece||full (eurozone)||Ordinary law|
|Ireland||full (eurozone)||Ordinary law|
|Italy||full (eurozone)||Constitutional law|
|Portugal||full (eurozone)||Organic law|
|Slovenia||full (eurozone)||Constitutional law|
|Spain||full (eurozone)||Constitutional law|
|Denmark||full (Titles III‑IV by declaration[a])||1 January 2013||[a]1 January 2013||Ordinary law|
|Romania||full (Titles III‑IV by declaration[a])||1 January 2013||[a]1 January 2013||Ordinary law|
|Slovakia||full (eurozone)||1 January 2013[b]||1 February 2013||Constitutional law|
(and implementation law for
the constitutional amendment)
|Luxembourg||full (eurozone)||1 January 2013[b]||1 June 2013||Ordinary law|
|Malta||full (eurozone)||1 January 2013[b]||1 July 2013||Ordinary law|
|Netherlands||full (eurozone)||1 January 2013[b]||1 November 2013||Ordinary law|
|Latvia||full (eurozone)||1 January 2013||[c]1 January 2014||Ordinary law|
|Bulgaria||Titles III (declaration)[d] and V||1 January 2013[e]||[d]1 January 2014 (only Title III)||Ordinary law|
|Belgium||full (eurozone)||1 January 2013[b]||1 April 2014||Ordinary law|
|Lithuania||full (eurozone)||1 January 2013||[f]1 January 2015||Constitutional law|
(entered into force 1 January 2015)[g]
|Hungary||Title V||1 January 2013[e]||No||Constitutional law|
|Poland||Title V||1 January 2013[e]||No||No|
(not required until euro adoption)
|Sweden||Title V||1 January 2013[e]||No||No|
(not required until euro adoption)
|Croatia||Title V||7 March 2018||No|
|Czech Republic||Title V||3 April 2019||No||Ordinary law|
(simple majority, not required until euro adoption)
The compliance of last years fiscal account and the equally important forecast fiscal accounts, with the criteria set by the Fiscal Compact, is summarized for each EU member state in the table below. The figures stem from the economic forecast published by the European Commission in November 2018, basing its forecast figures on the government's already implemented fiscal budget law 2018 and its recently proposed fiscal budget law for 2019. Non-exempted breaches of either the deficit or debt criteria in the Stability and Growth Pact (SGP), will lead the commission to open up an Excessive Deficit Procedure (EDP) against the state through the publication of a 126(6) report, in which a deadline to rectify the issue is set – along with the request for the state to submit a compliant fiscal recovery and reform plan (referred to as an Economic Partnership Programme – or alternatively an Economic Adjustment Programme if the state receives a sovereign bailout). All current EDP deadlines are listed in the last column of the table.
The table also list each member states' Medium-Term budgetary Objective (MTO) for its structural balance, and its current target year for achieving this MTO. Until the MTO has been achieved, all states are obliged to adhere to an adjustment path towards this country-specific target, where the structural balance must improve at least 0.5% points per year. The MTO depicts the most adverse structural balance per year the country can afford, when targeting that debt-to-GDP ratios first decline to below 60% and subsequently remain stable below this level for the next 50 years while adjusting for the forecast change of aging related costs. Beside existence of the debt dependent minimum limits for the MTO dictated by the Fiscal Compact, there is also existence of two other calculated minimum limits for the MTO determined by a formula ensuring respectively "a safety margin to respect the nominal 3%-limit during economic downturns" and "long-term sustainability of public finances taking into account the forecast for future adverse aging related costs". The final country-specific MTO minimum limit will be determined as the one respecting all of the three determined minimum limits (note: those non-eurozone states neither having entered ERM-II nor ratified a submission to Title III of the Fiscal Compact, are only required to respect the first two calculated minimum limits), and this final limit will be recalculated by the European Commission once every third year (most recently in October 2012). Subsequently, and as a final step, each state have the prerogative still to set its MTO at a level being stricter than the one calculated by the European Commission, but can not set it at a limit being worse. The states will communicate their final MTO selection in their annual Stability and Convergence Report, in which the attached target year for obtaining the selected MTO will also be revealed/updated according to the latest macroeconomic developments and success of the previously implemented fiscal policies by the concerned state.
Green rows in the table reflect full compliance with the Fiscal Compact criteria, requiring the state to have achieved its MTO for the entire 2015–17 period. Yellow rows represent compliance with only the Stability and Growth Pact (SGP), as the state is still on an adjustment path to respect its MTO at a midterm horizon. Red rows reflect an "apparent breach" of the SGP's EDP-criteria (nominal debt/deficit rules), which as minimum will merit the publication of a 126(3) report to investigate if the "apparent breach" was "real" (with an EDP finally only opened against the state by the launch of a 126(6) report, if the breach was found to be "real" by the 126(3) report).
(assessed Nov 2019)
(worst figure in 2018–20)
(worst figure in 2018–20)
|MTO for structural balance
(compliance checked for 2013–15)
(approved by EC)
(as of 10 November 2019)
(or declining at sufficient pace)
|max. -3.0%||min. -0.5%
(or −1% if debt<60%)
|MTO achieved |
(or adjustment path obeyed)
|Austria||74.0% (back-+forward-compliant)C||0.2%||-0.3%||-0.5% in 2018||No||No EDP (since 2014)|
|Belgium||100.0% (decline in 2018–19)||-2.0%||-2.4%||0.75% in 2016||No||No EDP (since 2014)|
|Bulgaria||22.3%||0.9%||0.6%||-0.5% in 2017||No||No EDP (since 2012)|
|CroatiaR||74.8% (back-+forward-compliant)C||0.0%||-1.0%||N/A||No||No EDP (since 2017)|
|CyprusT||100.6% (decline in 2019–20)||-4.4%||0.6%||0.0% in 2032||Yes (expired 2016)3||No EDP (since 2016)|
|Czech RepublicR||32.6%||-0.1%||-0.4%|| in 202X)No (−1.0%||No||No EDP (since 2014)|
|Denmark||34.2%||0.5%||1.0%||-0.5% since 2011||No||No EDP (since 2014)|
|Estonia||8.4%||-0.6%||-2.2%||0.0% in 2015||No||Never had an EDP|
|Finland||59.0%||-1.4%||-1.6%||-0.5% in 2014||No||No EDP (since 2011)|
|FranceT||98.4% (no decline)||-3.1%||-2.7%||0.0% in 2019||No||No EDP (since 2018)|
|Germany||61.9% (back-+forward-compliant)C||0.6%||0.7%|| achieved since 2012)Yes (−0.5% MTO||No||No EDP (since 2012)|
|GreeceT||181.2% (decline in 2019–20)||1.0%||1.8%||N/A||Yes (expired 2018)3||No EDP (since 2017)|
|HungaryR||70.2% (back-+forward-compliant)C||-2.3%||-3.8%||-1.7% since 2012||Yes (expired 2010)2||No EDP (since 2013)|
|Ireland||63.6% (back-+forward-compliant)C||0.1%||-0.8%||0.0% in 2019||Yes (expired 2013)3||No EDP (since 2016)|
|Italy||134.8% (no decline)||-2.3%||-2.5%||0.0% in 2016||No||No EDP (since 2013)|
|Latvia||36.4%||-0.7%||-1.9%||-0.5% in 2019||Yes (expired 2011)2||No EDP (since 2013)|
|Lithuania||34.1%||0.0%||-1.6%||-1.0% in 2015||No||No EDP (since 2013)|
|Luxembourg||21.0%||1.4%||0.8%||0.5% in 2013||No||Never had an EDP|
|MaltaT||46.8%||1.0%||0.5%||0.0% in 2017||No||No EDP (since 2015)|
|Netherlands||52.4%||0.5%||0.2%||-0.5% in 2018||No||No EDP (since 2014)|
|PolandR||48.9%||-1.0%||-2.2%||-1.0% in 2018||No||No EDP (since 2015)|
|PortugalT||122.2% (transitional-compliant)C||-0.4%||-0.6%||-0.5% in 2015||Yes (expired 2014)3||No EDP (since 2017)|
|Romania||35.0%||-4.4%||-4.4%||-1.0% in 2014||Yes (expired 2015)2||No EDP (since 2013)|
|Slovakia||49.4%||-1.2%||-1.8%||-0.5% in 2022||No||No EDP (since 2014)|
|SloveniaT||70.4% (back-+forward-compliant)C||0.5%||-1.0%||-0.5% in 2017||No||No EDP (since 2016)|
|SpainT||97.6% (decline in 2018–20)||-2.5%||-3.2%||0.0% in 2026||No||No EDP (since 2019)|
|SwedenR||38.8%||0.1%||0.2%||-1.0% since 2011||No||Never had an EDP|
|No||No EDP (since 2017)|
1 Did not sign the Fiscal Compact.
T Transitional states, only required to have a declining debt-to-GDP ratio to the extent of ensuring full debt-criterion compliance by the end of their 3-year transition period following EDP abrogation.
C Compliance: see Content/Title III/Debt brake – back: b2015 bb2015 – forward: b2017 bb2017 – transitional: fulfills old debt brake for each year of transition period.
The noted ongoing EDPs will be abrogated, as soon as the concerned state for the period encompassing the last completed fiscal year (based on final notified data) and for the current and next year (based on forecast data), succeeds in delivering a general government account in full compliance with the SGP's deficit criteria (budget deficit no more than 3.0% of GDP) and the debt criterion (debt‑to‑GDP ratio below 60% – or sufficiently declining towards this level). The deadlines for EDP abrogations will only be extended if extraordinary circumstances occur – like a recession or severe economic downturn. As part of the increased surveillance efforts introduced by the Sixpack, all EDP's are now evaluated three times per year, based upon data from the commission's economic outlook reports published in February, May and November. Member states involved in bailout programs are evaluated even more frequently and more in depth, through the so-called "Programme Reviews". EDP abrogations are normally announced in June, as they always await final notified data for the last completed fiscal year (being published in early May), but can occasionally also be announced later in the year (due to later arriving positive data revisions for recorded data or subsequent improvements materializing for its forecast data). The SGP and Fiscal Compact feature identical debt criteria, so they only differ compliance wise for the deficit criteria, where the Fiscal Compact sets the additional structural deficit criteria to be met as a main criteria (elevating its importance from the additional but less binding MTO adjustment path criteria).
The debt-criterion has due to transitional reasons been split into three different requirements, being in place since the sixpack reform was implemented in November 2011. For states aspiring to have their ongoing 2011‑EDP abrogated based on compliance with the debt-criterion, this will require they deliver a declining debt-to-GDP ratio for the last year in the forecast horizon, which was even changed to "no declining requirement at all" – as per the latest revised procedure published in 2013. The second debt-criterion is the so-called "transitional criteria", applying for states with an abrogated 2011‑EDP throughout a three-year transition period, in which the debt ratio is required to decline steadily towards full compliance with the debt brake benchmark rule by the end of the transition period – by annual improvements equal to the calculated Minimum Linear Structural Adjustment (MLSA) of its general government deficit. Finally in the fourth year after the 2011‑EDP has been abrogated, all transitional states will be assessed for compliance with the normal "debt brake benchmark rule" (which also apply towards states that never had a 2011‑EDP).
The new "debt brake benchmark rule" require the state to deliver, either for the three year backward-looking or cyclically adjusted backward-looking or forward-looking period, an annual debt-to-GDP ratio decrease of at least 5% of the benchmark value in excess of the 60% limit. As Germany and Malta both had their 2011‑EDP abrogated in 2012, these two states will need to comply with the "debt brake benchmark rule" starting from Fiscal Year 2014, with their first official debt-reduction evaluation expected to be published shortly after the year has ended – and at the latest when the Commission publish its assessment of the next Stability Programmes of the member states in May 2015. Among the member states with a debt-to-GDP ratio above 60% in 2013, Croatia was the first one being required to comply with the new "debt brake benchmark rule" in January 2014, where the European Commission concluded no compliance was found, due to both its debt-to-GDP ratio and cyclically adjusted debt-to-GDP ratio exceeding its calculated backward-looking benchmark limit in 2013 (75.7% 61.4% and 71.3%* 61.4%) and due to its forecast forward-looking debt-to-GDP ratio exceeding its calculated benchmark limit in 2015 (84.9% 72.9%).
The Council and the member states decided on a comprehensive package of measures to preserve financial stability in Europe, including a European financial stabilisation mechanism, with a total volume of up to EUR 500 billion.
Vláda ČR se rozhodla ke Smlouvě přistoupit, aniž by učinila toto oznámení, na jehož základě by byla ČR následně vázána ustanoveními hlav III (Fiskální kompakt) a IV (Koordinace hospodářských politik a konvergence) Smlouvy nebo jejich částí.