Note:Your browser doesn't correctly display this page because of a bad stylesheets interpretation. This is probably due to an old browser version.
The Governments of the Benelux countries welcome the agreement on the Stability and Growth Pact.
With this agreement, an end has been put to the concerns raised by the discussions surrounding the Pact for the past two years. The Pact has neither been weakened nor loosened. The Pact is confirmed as a strong instrument to foster budgetary discipline. It is given new vigour and a better framework for an economically sensible implementation.
The two reference values of 3% for the deficit and 60% for the debt are clearly upheld. Whenever they are breached, a Member State will come under the enhanced surveillance of its peers by way of a Commission report and assessment by the Council in order to ensure that gross policy errors as opposed to economic "bad luck" are identified. No expenditure will be excluded from the 3% limit.
When taking into account "relevant factors" - which are already in the Treaty and which have to be used in a balanced overall assessment - the decision whether an excessive deficit exists will be fully conditional on the overarching principle that - before these factors are taken into account - the excess over the reference value has to be temporary and the deficit has to remain close to the reference value; nor can those relevant factors be invoked to put an end to an excessive deficit procedure. More emphasis will be placed on debt developments and sustainability. Moreover, economic rationale will play its role : The more sophisticated rules now agreed allow to take into account each country's specificities and to give it the time required for a return to a sustainable position if it follows the recommendations by taking effective action. However a country in excessive deficit will be required to achieve an annual minimum fiscal effort.
The preventive arm of the Pact has for the first time been given real substance. Periods of economic growth will have to be used to actively consolidate public finances. Extra revenues will have to be directed towards reducing debts and deficits. The medium term objective for each Member State is tailored to the economic and debt situation of each country, so that for instance high debt countries should strive towards a more stringent objective. Structural reforms are encouraged by the possibility to take them into account on the path towards adjustment.
Improved governance rules for the Pact strengthen its legitimacy and the commitments of both Council and Commission to uphold it as well as Member States' ownership of the Pact. The Benelux Governments specifically welcome that the Commission's responsibility as guardian of the Pact has been confirmed and strengthened in the direction of early policy advice and assessment of Member States' budgetary policies.
The Benelux Governments therefore consider that the renewed Pact thus achieves a good balance between the requirements of both stability and growth.
The Benelux Governments underline that implementation of the new rules is key to the success of the Pact. They are more than ever committed to achieve the sustainability of public finances through a firm implementation of the agreement to which they have signed up.
Copyright © Luxembourg Government