Stability and Growth Pact
The Stability and Growth Pact (SGP) is a rules-based framework for the coordination of national fiscal policies in the European Union.
The SGP if comprised of the Resolution of the European Council of 1997, Regulation 1466/97 regarding the preventive arm of the SGP and Regulation 1467/97 regarding the corrective arm of the SGP. The cornerstone of the preventive arm is the Medium-Term Budgetary Objective, defined by the Member State on the structural balance. The Commission and the Council monitor progress towards it. The corrective arm of the SGP includes the Excessive Deficit Procedure and the thresholds of 3% of GDP for the general government deficit and 60% of GDP for the general government, as defined in the Treaty.
The Stability and Growth Pact was revised in 2005 and 2011. The legislation was supplemented by two regulations in 2013. The inter-governmental Fiscal Compact entered into force on 1 January 2013. The Financial Policy Act was passed in Finland on the basis of the Fiscal Compact. The related legislation is supplemented by Code of Conduct clarifying the application of the law.
The Stability and Growth Pact regulations include a review clause according to which the functioning of the regulations is to be assessed every five years. In the first assessment in 2014 it was noted that the time passed since the adoption of reforms was too short to allow an assessment of their effectiveness.
The European Commission launched a review process in early 2020 with the objective of launching a broad debate on the effectiveness of the fiscal policy framework. However, the COVID-19 crisis brought the process to a standstill before the Economic and Financial Affairs Council began to discuss it. The Commission will relaunch the discussion in autumn 2021.
Stability and Growth Pact (European Commission)
Head of Secretariat for EU Affairs
Tel. +358 295 530 441