Professional Documents
Culture Documents
Anton MANGOV
DG ECFIN, Fiscal Policy and Surveillance Unit (C1)
OUTLINE
1. Introduction
2
Fiscal policy in the EU context
• EMU as unique model of economic integration
• Common monetary policy & decentralised fiscal policies
4
What’s the goal of the Preventive Arm?
Structurally
sound
Builds
Controls
buffers
expenditure
against bad
dynamics
times
Requirements
(i) Safety margin with respect to the 3% BAD TIMES
(ii) Sustainability of public finances DEBT and FUTURE LIABILITIES
(iii) Allow room for stabilization over the cycle STRUCTURAL
Limits
Process
• MS chose their MTOs in the Stability and Convergence Programmes 6
• Commission checks that they comply with above requirements
What should Member States do?
• If Member State at MTO at the start of the year:
• Remain at MTO
7
How does the EDP work?
Council
Deficit > 3% decision on
of GDP opening EDP Commission
MS has 3-6
and/or Commission based on assesses
months to
Debt > 60% report on the Commission 'effective
comply with
of GDP and not reasons behind opinion action' and
recommendatio
diminishing at the breach informs the
ns
a satisfactory Council
Provides
pace recommendat
ions,
deadlines,
targets
8
How does the EDP work?
Commission
Targets are Council takes Council takes
proposes EDP EDP CLOSED
met note final decision
abrogation
EFFECTIVE
ACTION
Council may
issue revised
Targets are not
recommendatio Back to step 3
met
ns and extend
deadline
9
How does the EDP work?
No effective
Step 4 Type of MS Council input Back to step 3 action
continues
Commission
assessment
Council gives
new
Non-euro area
recommendatio Back to step 3
MS
n, deadline,
targets
NO
EFFECTIVE
ACTION MS does not
€ Council gives
notice, detailed
take action
repeatedly,
Euro area MS requirements Back to step 3 Council gives
notice, detailed
SANCTIONS requirements
SANCTIONS
10
Fiscal policy in EMU: Who does what?
11
European legislation on NFFs
• EU Directive on budgetary frameworks (2011) sets minimum
requirements for:
• Accounting & statistics
• Forecasts
• Numerical Fiscal Rules (NFRs)
• Medium-Term Budgetary Frameworks (MTBFs)
• Transparency
13
Debt developments are less benign…
14
… and pro-cyclicality has not been avoided
15
The increasing number of IFIs in the EU
16