Talk:Stability and Growth Pact

What about prevention? ("Close to balance or in surplus")

There are two arms to the SGP: a preventative arm and a corrective (dissuasive) arm. The preventative arm calls for medium term objectives of 'close to balance or in surplus'; the corrective arm is the part that can result in sanctions under the excessive deficit procedure (EDP). See http://ec.europa.eu/economy_finance/sg_pact_fiscal_policy

The current article only discusses the corrective arm, and ignores the preventative arm. --Irisv (talk) 14:41, 6 August 2009 (UTC)

Claim of limitation of EZ nation growth by the pact

One of the responding MEPs here (Miguel Portas) blames lack of growth in some countries (Greece, Portugal) since the founding of the Euro on "stability pacts" (are there others?). It would be useful to add this idea to the article, upon confirmation that it is a reasonably widespread, notable view.

http://www.europarltv.europa.eu/yourVoice.aspx?lang=en

Mr. Jones (talk) 17:30, 6 June 2010 (UTC)

The Table

One column heading is deficit as percentage of GDP, then countries with deficits have a negative value in this column. Also it states "min -3%," I just think it would be clearer if this was "max 3%" ie countries should not have a deficit larger than 3%, with the values below subtracted from 0. —Preceding unsigned comment added by 86.8.180.194 (talk) 22:10, 22 June 2010 (UTC)

The table is badly outdated, considering that it predates the 2008 financial crisis as well as the current euro crisis. I suggest either removing the table or updating it with the 2010 figures. Tronic2 (talk) 08:09, 4 September 2011 (UTC)

UK data correct?

Isn't the UK's public deficit much higher? Afaik, the UK has a deficit of roughly 70%, and the most recent government deficit was 10%+ https://www.cia.gov/library/publications/the-world-factbook/rankorder/2186rank.html?countryName=United%20Kingdom&countryCode=uk&regionCode=eu&rank=22#uk --178.25.83.60 (talk) 19:33, 8 October 2010 (UTC)

Reform of 2010

I think the proposals to reform to SGP following the 2010 European sovereign debt crisis to a more automatic penalties for states that break the 3%/60% rule should be mentioned. [1] Alinor (talk) 07:24, 26 October 2010 (UTC)

This is related to the already agreed high-level reviews of national budgets at EU level. Alinor (talk) 07:28, 26 October 2010 (UTC)

Better structure needed

I just don't see how the intro does a better job than the official one :

The Stability and Growth Pact (SGP) is a rule-based framework for the coordination of national fiscal policies in the economic and monetary union (EMU). It was established to safeguard sound public finances, an important requirement for EMU to function properly. The Pact consists of a preventive and a dissuasive arm.

About:

"Member states adopting the euro have to meet the Maastricht convergence criteria, and the SGP ensures that they continue to observe them."

Is not accurate. The convergence criteria include inflation and exchange. The author just didn't think it through. As for referencing the Guardian to prove that it was created in 1997, rather than an official page of the EU...it's perplexing.

A clear distinction must be made about these topics:

1- The provisions of the treaty 2- The implementation of the treaty 3- The economic debate about the treaty. 4- Evolution of 1, 2, and 3 in time

Obviously there are interrelations between them: poor implementation led to a rethinking of the economic rationale and/or the provisions of the treaty, leading to a new framework. The easiest way is to break down the history of the SGP into Stages: beginnings, Reform of 2005, Reform of 2011.

As is, sections Criticism and Reform do not bring that out enough and overlap a bit. The pros and cons of the economic debate are virtually in existent whereas there's a lot to be said. Romano Prodi is an economist. He might have had more insightful comments than "it's stupid".

Section Reform could be renamed Stages and what is in Criticism transferred to Stages.

I don't see the point of stating the four strategic goals of the Euro Plus Pact. Leave that to the wiki page dealing with it. — Preceding unsigned comment added by McKidd (talk • contribs) 16:37, 23 December 2011 (UTC)

EU six pack

Very important legislative package entered into force in 2011[2]. I don't see this mentioned here or in another article, so maybe a EU Economic governance "Six-Pack" should be created. Japinderum (talk) 05:47, 19 February 2012 (UTC)

See also here.

Actually, the EU six pack (and the expected additional EU regulations for Commission oversight of eurozone national budgets) constitute more of a "fiscal union" than the "Treaty on Stability, Coordination and Governance in the Economic and Monetary Union" that only slightly tweaks the already existing debt/deficit rules. Japinderum (talk) 10:21, 20 February 2012 (UTC)

Check this out: Sixpack (EU). Best wishes, --spitzl (talk) 18:21, 20 February 2012 (UTC)

Request to remove the figure "Fiscal Compliance 2013"

The figure is not supported by any source and is biased since the word "declining" referred to Germany seems to express a political opinion. Why the same word has not been included in the column concerning Hungary? For at least the above reasons, the figure offends the provisions of Wikipedia concerning the objectivity and the reliability of the sources and therefore should be removed. — Preceding unsigned comment added by 93.92.153.12 (talk) 13:25, 2 April 2013 (UTC)

The table currently display the final 2011 fiscal data, which mean observations are made by the end of December 2011. The source is clearly listed ahead of the table. We have been waiting for the final 2012 fiscal data to be published, before updating the table. These data just arrived on 3 May 2013. I intend to update the table accordingly, later this week. To simplify the table and reporting concept, it only show the SGP compliance situation for final fiscal data. I know the SGP also demand states to be evaluate upon their forecasted data, but I think its way too complicated if we attempt for the table also to show this compliance parameter. Best regards, Danish Expert (talk) 12:02, 6 May 2013 (UTC)

MTO data table: Target year or Achievement year ?

Recently I have extended the article with a short MTO chapter (including a MTO data table), which btw soon also will be extended with details reported from the Fiscal Compact talkpage. To clear up any potential confusion I just want to add this short note at the talkpage, that the added MTO data table only feature each state's MTO, with note of its forecasted "Achievement year" in case it has not yet been achieved. My reason for selecting this data format, is that I want the table mainly to report when it has been forecasted each state will comply with its MTO (as per the state's annual stability/convergence report). And besides, all states in those reports have also explicit reported a "MTO achievement year". UK is however an example that can lead to some confusion, as the state report both a "MTO CACB target year" (decided by the "fiscal mandate" to be the last accounting year in a five-year rolling period, meaning it is currently 2017-18) and a forecasted "MTO CACB achievement year" (saying it is currently expected the MTO CACB will be achieved in 2016-17). Thus for UK the table cell for 2013 show "0.0% in 2016-17" (with the background color red to symbolize its MTO-CACB was not achieved in 2013). Danish Expert (talk) 05:33, 4 June 2013 (UTC)

Croatia

The first graph has only 27 instead of 28 countries. 83.184.50.142 (talk) 03:55, 21 April 2015 (UTC)

List of the various MTO definitions

After having updated the MTO data table with a lot of hidden notes explaining how each nation operate its MTO, I just wonder if it would be good/bad for the article to feature a short "list of all various MTO definitions", as an extra quick-guide to avoid readers are getting confused between what the various MTOs mean. In example, such overview list could be like this:

• MTO^MB: MTO Minimum Benchmark, is calculated upon country-specific outputgaps (predicting the worst structural balance figure appearing with a 95%-likelihood during an entire business cycle) and country-specific budget semi-elasticities, so that a public budget safety margin is created to ensure the 3%-limit will be respected even during economic downturns. Beside of being one of the four figures considered to determine the "Country-specific Minimum MTO", the MTO^MB also provides a lower limit when the Commission judge if a temporary significant deviation from the MTO-target can be allowed (under the condition the MTO-target is met at the latest 4 years later, and that the deviation stem from structural reforms or the the building up of a pension scheme).
• MTO^ILD: MTO Implicit Liabilities and Debt minimum value, ensuring long-term sustainability of public budgets.
• MTO^ea/erm2: MTO common currency convergence limit at -1.0%, applying for all Euro Area and ERM2 member states since 2005.
• MTO^fc: MTO fiscal compact limit as specified for those states having ratified Title III of the Fiscal Compact (-0.5% when debt>60%).
• Country-specific Minimum MTO: Being calculated each year by the Commission to be the most strict of the four MTOs listed above (rounded to a ¼-value), which the Nationally selected MTO need as minimum to respect.
• Nationally selected MTO: The government each year in their Stability/Convergence programme announce their Nationally selected MTO for the upcoming medium-term, which as minimum will respect the Country-specific Minimum MTO and can be set at stricter levels if desired.
• Nationally selected non-binding MTO target: In addition to the Nationally selected MTO, which is binding for the state as part of the Commission's annual review of its economic programme, a few states also selected a non-binding operational MTO target to steer towards. In example, Sweden target a +1% average structural balance surplus across its current business cycle (operationalized to mean a +1% average for the nearest 3 recorded and 4 forecast years). Denmark in comparison also selected an operational non-binding structural balance target to be 0.0% in 2020, but refrained from calling it a MTO (only described it as an operational target). Beside of Sweden+Denmark, another example is Latvia, which because of insisting to apply a national method (rather than the Commission's method) to calculate structural balance, has set a -0.5% non-binding MTO target for its "structural balance calculated according to their national method" (note: while it is non-binding towards the Commission, it is still binding according to their national fiscal responsibility law - but only under the condition that the national calculation method is being utilized).

To be frank, I am not quiet sure if a list like the one above, would be helpful or not in the article, as we should also aim "not to add redundant info" and adhere to the principle of "keep it simple". So for the moment, it will only be visible here at the talkpage. But if you have an opinion if its good/bad to add such "overview list" in the article (for the sole purpose of clarifying the confusing MTO nomenclature), then please let me know. Danish Expert (talk) 09:24, 25 April 2015 (UTC)

State-owned enterprises

Are debts owed by State-owned enterprises included in the debts?--BIL (talk) 20:57, 9 May 2015 (UTC)

@BIL: Yes, such debts are included by the Gross-debt figure, which the SGP limit to be Max.60%. One of the reasons Malta recently surpassed the 60%-limit, was because of increasing debt established by the fully state-owned Air Malta enterprise. However, I am not quiet sure how they deal with the partly state-owned enterprises (i.e. when 51% or 49% of the shares are state-owned, then they might include the same percentage of debt - or perhaps be "friendly" and completely disregard the debt), so if you want to know the specifics about that, then I have to refer you to a visit and read of the ESA-2010 methodology manuals at the Eurostat webpage, to dig up this additional info. :-) Best regards, Danish Expert (talk) 19:35, 10 May 2015 (UTC)

There are ways around registering debt, however beneficial short-term only. For example public–private partnership and leasing, where private companies take the debt and are paid in way not called interest rate, for example rent. This adds however to the budget deficit, and costs more than loan-financing. The Swedish government avoids PPP, however Scandinavian Airlines is a heavy leasing customer. Are there any restrictions against this way of avoiding government debt? BIL (talk) 19:38, 12 May 2015 (UTC)‎

I am not an expert into these debt-ratio matters. Only thing I know, is that the debt criteria only started to become important (being able to trigger an EDP) once the sixpack and debt-reduction rule was implemented as part of reforming the SGP in November 2011. Regulation-wise, not much have been done to ensure that states avoid cooking their books in regards of the gross debt figures, as the Commission has opted instead to put relative more emphasis into ensuring that the 3%-nominal-deficit limit and 0.5%~1.0% structural-deficit limit (or the adjustment path towards them) are respected, because if this is the case, then this will automatically mean in 99.99% of all cases that the 60% debt-limit and/or debt-reduction rule automatically will be complied with (because nominal GDP growth will more than outweigh the limited deficits). The only historic debt definition detail, that I currently have knowledge of, was that many credits given to European governments during 1999-2010, were disguised as "swaps" and consequently did not get registered as debt because Eurostat at the time ignored statistics involving financial derivatives. Today, such "currency swap" (loan) arrangements are however included by the Eurostat statistics definition for Gross-debt (as specified by point 44+45 at page 400 in the ESA2010-methodology report, along with the fact that Eurostat after the 2008 Financial Crisis were granted power - through the pass of a new EU regulation - to perform audit missions locally in each EU Member State for the purpose to ensure their government statistics follow the spirit of the published methodological rules). Danish Expert (talk) 19:31, 17 May 2015 (UTC)

In addition, I also recently learned from this source (see box 6.2), that Eurostat now: "is working to supplement the EMU debt - also referred to as Maastricht or EDP debt - [which do not include "government-guaranteed securities issued to government-owned companies" in the account of gross debt] with a measure of net debt [meaning establishment of a new harmonized common EU method to enable comparison of published net debt figures between the member states]. In the [proposed new] compilation of net debt, financial assets, including on-lending, will be offset against EMU debt. This means that the type of funding chosen by the government-owned companies [whether it is on-lending or government-guaranteed securities] will not affect this [proposed new] compilation". Danish Expert (talk) 19:31, 17 May 2015 (UTC)

@BIL: As for your question about how PPP and leasing is treated, I believe a read of the ESA 2010 methodology manual (implemented in Sep.2014) will reveal all the answers. I do not have the time myself to look further into this issue. Best regards, Danish Expert (talk) 07:45, 18 May 2015 (UTC)

When will a recalculated Min.MTO replace its predecessor?

This question appear to blow in the wind, or at least difficult to answer. My first search found, that after the Minimum MTOs had been recalculated and published by the European Commission back in 2009, then Luxembourg (and most other states) opted to revise their "Nationally selected MTO" (being published in the spring 2010 Stability/Convergence report), so that it respected its recalculated Min.MTO already starting from 2010. However, Slovenia opted only to revise their "Nationally selected MTO" so that it respected their recalculated Min.MTO, starting from 2011 (being published in their spring 2011 Stability report). Unfortunately, the SGP Vade Mecum (manual) did not answer my question, if Slovenia was really allowed to wait this long after having its Min.MTO recalculated, before implementing a "Nationally selected MTO" respecting this recalculated Min.MTO. Looking at how the same recalculation procedure took place three years later (with Min.MTOs recalculated in 2012), then the Commissions Staff Team reprimanded Slovenia for not having picked a "Nationally selected MTO" respecting its recalculated Min.MTO in 2013! Did the time-window for implementation of recalculated Min.MTOs narrow in 2012/13, or did Slovenia simply just breach the time-window for implementation in 2009/10? Insights to shed light on this issue, would really be appreciated. Danish Expert (talk) 06:54, 26 May 2015 (UTC)

After searching for the answer, I found out, that Slovenia in fact also was reprimanded by the Commission in 2010 for having selected a too low MTO. So, I think its safe to conclude, that the recalculated MTO shall be adopted already starting from the following year. However, it also appear from reading the 2015 Latvian stability programme, that compliance against the recalculated Minimum Benchmark as well as recalculated Minimum MTO only will be required starting from one year further down the road, meaning that the 2015-recalculated Minimum MTO shall be respected when setting Nationally selected MTOs in the upcoming 2016 Stability programmes - altbough respect of the potentially revised MTO (or the appropriate adjustment path towards it) only needs to be ensured starting from the fiscal year following the one when the revised MTO has been announced. So the required roadmap is: Recalculation in 2015, Announcement of a MTO respecting the recaluclated Min.MTO in 2016, and a potentially revised MTO will then replace the previous MTO with accounting effect in 2017. Danish Expert (talk) 22:37, 26 May 2015 (UTC)

The above noted roadmap has now been confirmed by the Commission. Min.MTOs will be recalculated inSep.2015 (although perhaps first revealed to the public when the Commission's "Fical Sustainability Report 2015" is published in Dec.2015), with all countries expected to select and announce their future "nationally selected MTO" equal to or above their new "Min.MTO" in their next 2016 convergence/stability programme, while any potentially revised "nationally selected MTO" finally only takes effect compliance-wise starting from 2017. Danish Expert (talk) 06:29, 14 August 2015 (UTC)

France, Germany violation a green light for Greece, Portugal?

This statement is currently in the article:

"The pact violations by France and Germany were seen as green light for Portugal and Greece to violate the pact."

According to the table, Portugal and Greece were in violation of the pact from 1998, so this statement is a bit suspect. I guess that the French and German violations could have been seen as tacit acceptance of Portugal and Greece's continued violation, but I think that conclusion needs a source. I've added a citation needed tag for now, but unless someone can support this statement, I think it probably shouldn't be in the article. Natsirtguy (talk) 21:33, 16 July 2015 (UTC)

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Dr. Turrini's comment on this article

Dr. Turrini has reviewed this Wikipedia page, and provided us with the following comments to improve its quality:

- recommendations in the SGP framework are not necessarily yearly (no legal requirement). The yearly requirement concerns the submission of stability or convergence programmes and an assessment by the commission. Recommendations by the Council upon Comission recommendation are possible in the framework of survillance under art. 121 TFEU.

- sanctions are only for euro-area members - The Mto is an objective for hte budget balance, not a limit - the EDP is triggered if either the deificit or the debt rule are violated, not when both are violated - the EDP recommendaiton does not need to include an adjustment path towards reaching the MTO, but it neds to include an adjustment path towards a deficit not higher than 3% of GDP - the sentence "Romano Prodi described it as "stupid",[11] but was still required by the Treaty to seek to apply its provisions" is incorrect as the SGP is made of regulations that operationalise the Treaty is not required by the Treaty itself - changes affectingthe corrective arm in 2005 are not commented - all the text below on the SGP reform of 2011 is redundant and misleading. The focus should be on the revision of hte two SGP regulations. A refernece to the regulation on budgetary plans in the "2 pack" and hte fiscal compact would also be useful.

delete all text below

In March 2011, following the 2010 European sovereign debt crisis, the EU member states adopted a new reform under the Open Method of Coordination, aiming at straightening the rules e.g. by adopting an automatic procedure for imposing of penalties[specify] in case of breaches of either the deficit or the debt rules.[17][18] The new "Euro Plus Pact" is designed as a more stringent successor to the Stability and Growth Pact, which has not been implemented consistently. The measures are controversial not only because of the closed way in which it was developed but also for the goals that it postulates.

The four broad strategic goals are: fostering competitiveness fostering employment contributing to the sustainability of public finances reinforcing financial stability.

An additional fifth issue is:[19] tax policy coordination

Overall - looking at the new European economic governance framework, it seems to be in front of a "mixture" of different acts adopted at various territorial levels and characterized by a different legal nature. In particular, three acts shall be ascribed to the international norms’ realm: (1) the European Financial Stability Facility (EFSF), created by the Euro area Member States following the decisions taken on 9 May 2010 within the framework of the ECOFIN Council. Particularly, the EFSF’s mandate is to safeguard financial stability in Europe by providing financial assistance to the Eurozone’s macro-economic adjustment programme ; (2) the Treaty establishing the European Stability Mechanism (ESM) was signed on 2 February 2012, after a decision taken by the European Council (December 2010). Designed as a permanent crisis resolution mechanism for the countries of the Euro area, the ESM issues debt instruments in order to finance loans and other forms of financial assistance to the involved Member States; finally, (3) the Treaty on Stability, Coordination and Governance (TSCG), whose final version was signed on 2 March 2012 by the leaders of all euro area members and eight other EU member states, and entered into force on 1 January 2013. The TSCG has been commonly labeled "Fiscal Compact ", originally intended to promote the launch of a new international economic cooperation enforced by those EU Member States which are also part of the so-called.

Strictly speaking, those mentioned are "legal" mechanisms which have been newly introduced, and therefore have to be distinguished from the measures instead representing an adaptation of pre-existing rules. The latter are "customary" EU secondary norms contributing to the formation of the legal structure underlying the new European economic governance:

- in the case of the so-called "Six-Pack", five regulations and one directive are at stake as of 13 December 2011, with a view to strengthening the Stability and Growth Pact (SGP) – that is a rule-based framework for the coordination of national fiscal policies in the European Union whose details would be mentioned below. - given the higher potential for spillover effects of budgetary policies in a common currency area, in November 2011 the Commission proposed two further regulations to strengthen euro area budgetary surveillance. This reform package, the so-called "Two-Pack ", entered into force on 30 May 2013 in all Euro area Member States. The new measures were meant to increase transparency on their budgetary decisions and stronger coordination within the 2014 budgetary cycle, as well as to recognize the special needs of Euro area Member States under severe financial pressure . - the "Euro Plus" pact, agreed in Spring 2011 by the 17 Member States of the Euro area (and joined by Bulgaria, Denmark, Latvia, Lithuania, Poland and Romania), is intended to reinforce the economic pillar of the monetary union and achieve a new quality of economic policy coordination, with the objective of improving competitiveness and thereby leading to a higher degree of convergence reinforcing social market economy

We hope Wikipedians on this talk page can take advantage of these comments and improve the quality of the article accordingly.

Dr. Turrini has published scholarly research which seems to be relevant to this Wikipedia article:

• Reference : Buti, Marco & Roger, Werner & Turrini, Alessandro Antonio, 2007. "Is Lisbon far from Maastricht? Trade-offs and Complementarities between Fiscal Discipline and Structural Reforms," CEPR Discussion Papers 6204, C.E.P.R. Discussion Papers.

ExpertIdeasBot (talk) 18:19, 27 June 2016 (UTC)

Member states by SGP criteria

The table in the section "Member states by SGP criteria" contains wrong information. First, there is several excessive deficit procedures missing for the 1990s, see for instance this. Second, it's strange to state that for instance Estonia breached the deficit/GDP rule in 1999 (!), before it was even an EU member. --Glentamara (talk) 21:51, 14 April 2020 (UTC)

Thanks Glentamara, for giving notification about the incorrect table format and data. I have in April 2024 implemented a major update to the table format, and verified its all current data is now correct for all states, plus properly sourced. Danish Expert (talk) 05:38, 12 April 2024 (UTC)