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Resolution of the Amsterdam European Council on the stability and growth pact
This Resolution provides the Member States, the Council and the Commission with firm policy guidelines for the timely and rigorous implementation of the stability and growth pact. It encourages Member States to apply sound budgetary policies from the time they enter the third stage of Economic and Monetary Union (EMU).
Resolution of the European Council on the Stability and Growth Pact (Amsterdam, 17 June 1997) [Official Journal C 236 of 02.08.1997].
This Council resolution establishes the political basis for the stability and growth pact. It provides the Member States, the Council and the Commission with firm policy guidelines for implementation of the stability and growth pact.
The Member States undertake to abide by the medium-term budgetary objective of positions close to balance or in surplus. In addition the Member States:
- are invited to make public, on their own initiative, the Council recommendations made to them;
- commit themselves to taking the corrective budgetary action they deem necessary to meet the objectives of their stability or convergence programmes;
- will launch the corrective budgetary adjustments they deem necessary without delay on receiving information indicating the risk of an excessive deficit;
- will correct excessive deficits as quickly as possible after their emergence;
- undertake not to invoke the exceptional nature of a deficit linked to an annual fall in GDP of less than 2 % unless they are in severe recession (annual fall in real GDP of at least 0.75 %).
- will exercise its right of initiative under the Treaty in a manner that facilitates the strict, timely and effective functioning of the stability and growth pact;
- will present without delay the necessary reports, opinions and recommendations to enable the Council to adopt decisions rapidly;
- undertakes to prepare a report whenever there is the risk of an excessive deficit or whenever the planned or actual government deficit exceeds the reference value of 3 % of GDP;
- undertakes, in the event that it considers a deficit exceeding 3 % of GDP is not excessive and that this opinion differs from that of the Economic and Financial Committee, to present in writing to the Council the reasons for its position;
- undertakes, following a request from the Council, to make, as a rule, a recommendation for a Council decision on whether an excessive deficit exists.
The Council is committed to rigorous and timely implementation of all elements of the stability and growth pact in its competence and in addition is:
- urged to regard the deadlines for the application of the excessive deficit procedure as upper limits;
- invited always to impose sanctions if a participating Member State fails to take the necessary steps to bring the excessive deficit situation to an end and to apply rigorously the whole range of sanctions provided for;
- invited always to state in writing the reasons which justify a decision not to act.
In September 2004 the Commission reacted to this and to the debate surrounding the stability and growth pact by issuing a communication on strengthening economic governance and clarifying the implementation of the Stability and Growth Pact. It proposes a series of improvements to the pact. The Commission focuses particularly on the trend in economic factors in the Member States and the long-term sustainability of public finances.
At the European Council of 22 and 23 March 2005 the Finance Ministers reached a political agreement on better management of the stability and growth pact.
- For further information, please see the Website of the Directorate General for Economic and Financial Affairs (DG ECFIN) concerning the Stability and Growth Pact