European Fiscal Compact

The EURO members "... CONSCIOUS of the need to ensure that their deficits do not exceed 3 % of their gross domestic product at market prices and that government debt does not exceed, or is sufficiently declining towards, 60 % of their gross domestic product at market prices ..." have agreed the "Treaty on Stability, Coordination and Governance in the Economic and Monetary Union". Also known as "TSCG" or "European Fiscal Compact", it came into force in 2013. 1)

The budgetary balance


The European Fiscal Compact defines the budgetary balance as follows:

  • the general budget deficit does not exceed 3.0% of the gross domestic product (GDP)
  • the structural deficit does not exceed a country-specific Medium-Term budgetary Objective (MTO), which defines a budgetary target. It can be set at most 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.

Examples




Sources


Eurostat, the statistical office of the European Union, provides all these figures in its "Euro indicators /PEEIs" database (PEEI: Principal European Economic Indicators).


References


1) TREATY ON STABILITY, COORDINATION AND GOVERNANCE IN THE ECONOMIC AND MONETARY UNION

Six-pack? Two-pack? Fiscal compact? A short guide to the new EU fiscal governance


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