Considerations on COM(2017)824 - Provisions for strengthening fiscal responsibility and the medium-term budgetary orientation in the Member States - Main contents
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| dossier | COM(2017)824 - Provisions for strengthening fiscal responsibility and the medium-term budgetary orientation in the Member States. |
|---|---|
| document | COM(2017)824  |
| date | December 6, 2017 |
(2) The Stability and Growth Pact (SGP) includes the multilateral surveillance system and the surveillance and coordination of economic policies laid down in Council Regulation (EC) No 1466/97 11 and the procedure for the avoidance of excessive government deficit laid down in Article 126 TFEU and further specified in Council Regulation (EC) No 1467/97. 12 The SGP has been further strengthened by Regulation (EU) No 1175/2011 of the European Parliament and of the Council 13 and Council Regulation (EU) No 1177/2011. 14 Regulation (EU) No 1173/2011 of the European Parliament and of the Council 15 added a system of effective, preventive and gradual enforcement mechanisms in the form of the imposition of sanctions on Member States whose currency is the euro.
(3) In order to encourage Member States' compliance with obligations under the TFEU in the area of budgetary policy, detailed rules concerning the characteristics of the budgetary frameworks of the Member States were laid down in the Council Directive 2011/85/EU. 16
(4) Since there is greater interdependence among the Member States whose currency is the euro and hence susceptibility to spill-over effects from each other’s budgetary policies, in order to further enhance economic integration, convergence and coordination among them, a number of improvements to budgetary coordination and surveillance were introduced through Regulation (EU) No 472/2013 of the European Parliament and of the Council 17 and Regulation (EU) No 473/2013 of the European Parliament and of the Council. 18
(5) With the aim of strengthening the foundations which ensure budgetary discipline throughout the economic cycle, on 2 March 2012 25 Member States signed and ratified the inter-governmental Treaty on Stability, Coordination and Governance (TSCG) in the Economic and Monetary Union. Title III of the TSCG, the 'Fiscal Compact', is binding on the Member States whose currency is the euro and, on a voluntary basis, on Bulgaria, Denmark and Romania (hereinafter the Contracting Parties), and sets an obligation to enshrine in the national legal order of those Contracting Parties a balanced-budget rule in structural terms equipped with a correction mechanism automatically triggered in case of significant deviation and monitored by independent institutions. The Contracting Parties expressed their will to use that inter-governmental instrument as a temporary device. That will is reflected in Article 16 of the TSCG which stipulates that, within five years at most following its entry into force, the necessary steps are to be taken with the aim of incorporating its substance into the Union legal framework. Therefore, provisions that allow the substance of the TSCG to take effect should be introduced in the Union's legal framework
(6) In order to maintain sound and sustainable public finances and to avoid excessive government deficits as required by the TFEU, while at the same time improving the resilience of the euro area as a whole, there should be specific provisions in the national law of the Member States whose currency is the euro to strengthen their fiscal responsibility and their medium-term budgetary orientation beyond the provisions of Directive 2011/85/EU.
(7) Since the economic and financial crisis has left a number of Member States with a legacy of high public debt, a framework of numerical fiscal rules specific to each Member State and which aim at strengthening its responsible conduct of fiscal policy while effectively promoting compliance with the budgetary obligations deriving from the TFEU is instrumental in ensuring convergence of public debt to prudent levels. Such a framework should operate in particular by setting a medium-term objective in terms of structural balance that is binding on the national budgetary authorities and their annual decisions. Medium-term objectives for the budgetary position allow the different public-debt-to-GDP ratios and sustainability risks of Member States to be taken into account, anchoring debt developments towards the reference value set out in Article 1 of Protocol No 12 on the excessive deficit procedure annexed to the Treaty on European Union and to the TFEU.
(8) In order to achieve and maintain the medium-term objective in structural terms, it is necessary for Member States to set out a consistent adjustment path, based on variables under the control of the budgetary authorities. National fiscal planning underpinned by a government expenditure path adjusted for the impact of discretionary revenue measures favours effectiveness, transparency and accountability when monitoring fiscal developments. In order to tightly connect plans with the overall fiscal outcomes in the medium-term and to ensure an enhanced sense of national ownership of fiscal policy, a medium-term growth path of government expenditure net of discretionary revenue measures should be set for the whole term of the legislature as established by the constitutional legal order of each Member State. That path should be set as soon as a new government takes office and annual budgets should adhere to it so as to bring about resolute convergence towards the medium-term objective.
(9) Due to their future positive effects, the implementation of major structural reforms fostering long-run sustainability could justify changes in the adjustment path towards the medium-term objective, provided that they have a verifiable positive budgetary impact which is confirmed by the assessment conducted according to the procedural requirements of the SGP. In order to facilitate economic stabilisation, exceptional circumstances – in the form of severe economic downturns for the euro area or the Union as a whole or unusual events outside the control of the Member State concerned which have a major budgetary impact – should allow for a temporary deviation from the medium-term objective or the adjustment path towards it, where such a deviation does not endanger fiscal sustainability in the medium-term.
(10) If they are not adequately addressed, significant deviations from the medium-term objective or the adjustment path towards it hamper the credibility of the budgetary plans and risk derailing government debt developments. To enhance the credibility of the Member States' commitment to the medium-term objective, a correction mechanism should be automatically activated in the event of a significant observed deviation. A credible correction mechanism should set out the measures which need to be implemented to correct the deviation over a defined period of time, taking account of the nature and size of the deviation. In particular, the correction mechanism should compensate for deviations from the medium-term growth path of government expenditure net of discretionary revenue measures.
(11) Independent bodies charged with monitoring public finances in the Member States are an essential building block of effective fiscal frameworks. In order to foster fiscal discipline and strengthen the credibility of fiscal policy, such bodies should carry out independent assessments of the framework of numerical fiscal rules, including notably the medium-term budgetary orientation, and should monitor compliance with that framework and the activation and operation of the associated correction mechanisms.
(12) Strengthened national fiscal responsibility and a binding multi-annual orientation of fiscal policy requires fiscal institutions to be independent and have their own resources for actively monitoring fiscal developments and providing recommendations throughout the medium-term bugdetary cycle, including in particular where a significant deviation from the medium-term objective or the adjustment path towards is observed. In order to boost the credibility and enforceability of the medium-term objective, its underlying government expenditure path and the related correction mechanism in case of significant deviations, the budgetary authorities of the Member States should comply with the recommendations put forward in the assessments of the independent bodies or publicly justify the decision not to comply with them. Anchoring that principle in the national legal order can play a crucial role in that respect.
(13) For greater efficacy of the shared goal of the national budgetary rules and mechanisms and the Union's fiscal framework, namely the convergence of public debt to prudent levels, Member States should give effect to the rules provided for in this Directive through provisions of binding force and permanent character, of constitutional nature or otherwise guaranteed to be fully respected and adhered to throughout the national budgetary processes.
(14) The European Council on 19 October 2012 concluded that the process towards deeper economic and monetary union should build on the Union institutional and legal framework and be characterised by openness and transparency towards Member States whose currency is not the euro. National measures to strengthen fiscal responsibility in those Member States would facilitate their adoption of the euro and therefore the mechanisms established by this Directive should be open to all Member States wishing to participate. Therefore, provision should be made for this Directive to be applicable to Member States whose currency is not the euro where those Member States so decide.
(15) It should be noted that Article 7 of the TSCG lays down that the Contracting Parties whose currency is the euro have committed to supporting the proposals or recommendations submitted by the Commission where it considers that a Member State whose currency is the euro is in breach of the deficit criterion in the framework of an excessive deficit procedure unless a qualified majority of them, calculated by analogy with the relevant provisions of the Treaties on which the Union is founded, without taking into account the position of the Contracting Party concerned, is opposed to the decision proposed or recommended.
(16) While the incorporation of the substance of the TSCG into the Union legal order as it currently stands does not extend to the alteration of arrangements laid down by the provisions of the TFEU for decision-making, this Directive should leave unaffected the commitments established between the Contracting Parties pursuant to Article 7 of the TSCG.
(17) Article 13 of the TSCG lays down that budgetary policies and other issues covered by that Treaty will be discussed in the framework of inter-parliamentary meetings held by the European Parliament and the national Parliaments of the Contracting Parties under Title II of Protocol No 1 on the role of national Parliaments in the European Union attached to the Treaties. This Directive should apply without prejudice to that practice, since such dialogue contributes to enhancing democratic accountability in the context of the Union's economic governance.
(18) This Directive should strengthen the effectiveness of the SGP by increasing the extent to which it is embedded in the legal orders of the Member States while at the same time diminishing the possible risks of duplications and conflicting actions inherent in the co-existence of intergovernmental arrangements alongside the mechanisms foreseen by Union law. The substantive and procedural rules set out in the SGP should not be affected by this Directive.
(19) In accordance with the Joint Political Declaration of 28 September 2011 of Member States and the Commission on explanatory documents, 19 Member States have undertaken to accompany, in justified cases, the notification of their transposition measures with one or more documents explaining the relationship between the components of a directive and the corresponding parts of national transposition instruments. With regard to this Directive, the legislator considers the transmission of such documents to be justified.
(20) Since the objective of the action to be taken, namely to strengthen fiscal responsibility by adopting a more binding medium-term budgetary orientation at national level, cannot be sufficiently achieved by the Member States and can be better achieved at Union level, the Union may adopt measures, in accordance with the principle of subsidiarity as set out in Article 5 of the Treaty on European Union. In accordance with the principle of proportionality, as set out in that Article, this Directive does not go beyond what is necessary in order to achieve that objective,