Work in progress: Discussions between Commission, Council and Parliament are ongoing;
Shall be agreed in summer (indicative);
Applicable to euro-area Member States only (based on Art 136 TFEU);
Aims at further strengthening the surveillance mechanisms in the euro area;
Regulation on monitoring and assessing draft budgetary plans and ensuring the correction of excessive deficits in euro-area Member States (original Commission proposal):
Common budgetary rules at the national level shall be monitored by independent institutions.
As part of a common budgetary timeline, euro-area Member States shall submit their draft budgetary plan for the following year to the Commission and the Eurogroup before 15 October, along with the independent macro-economic forecast on which they are based.
This builds on the Stability and Growth Pact (SGP), under which Member States present the main characteristics of their medium-term public finance plans to the Commission and the Council in spring (in Stability or Convergence Programmes). The exercise in autumn introduced by the two-pack allows monitoring and sharing information on MS budgetary policies closer to their adoption. The Commission analyses if the draft budget is in line with the SGP and the recommendations from the European Semester (which the country has received in May/June).
If the Commission assesses that the draft budgetary plan shows serious non-compliance with the SGP, the Commission can require a revised draft budgetary plan. Otherwise it may address an opinion to the Member States concerned, which would also be discussed by the Eurogroup.
This Regulation therefore complements the preventive arm of the SGP, in particular, by ensuring appropriate integration of EU policy recommendations in the national budgetary preparations and increasing peer pressure in the Eurogroup.
The National Parliaments remain fully sovereign in voting the Budget Law. With the Regulation, they would be now equipped with an independent opinion on the budgetary plans, namely the Commission opinion.
For euro-area Member States in EDP, the Regulation introduces a system of graduated monitoring in order to secure a timely and durable correction of excessive deficits. This would in particular allow an early detection of risks that a Member State does not correct its excessive deficit by the deadline set by the Council, and permit to take action accordingly.
The co-legislators, together with the Commission, are aiming at incorporating elements of the TSCG in this Regulation: in particular, the requirement to set up independent institutions in charge of monitoring fiscal rules which should implement the MTO at the national level, ex ante coordination of debt issuance plans and economic partnership programmes detailing structural reforms necessary to ensure an effective and durable correction of the EDP.
Regulation on enhanced surveillance of euro-area Member States experiencing or threatened with financial difficulties:
euro-area Member States experiencing or threatened with serious difficulties will be subject to enhanced surveillance. Commission may decide this.
Automatic enhanced surveillance for countries receiving certain types of precautionary financial assistance (in keeping with EFSF and future ESM guidelines). The list of precautionary assistance instruments concerned will be established and maintained by the Commission.
An obligation on Member States to adopt measures to address the sources of instability.
Regular review missions and the provision of more detailed or disaggregated financial sector data if requested.
Quarterly reporting by Commission to Eurogroup Working Group.
Procedure for deciding and monitoring a macro-economic adjustment programme:
Member States facing insufficient administrative capacities must seek technical assistance from Commission (e.g. Task Force for Greece).
If necessary Council may decide that beneficiary Member State does not comply with policy requirements contained in the adjustment programme. As a result, the country concerned would face financial consequences with regard to the disbursements under the programme.
Simplification of the monitoring of programme countries: In order to avoid duplication and overburdening, the monitoring under the SGP and the implementation of the Macroeconomic Imbalance Procedure and the European Semester shall be suspended, as programme countries are per se subject to wide ranging surveillance and strict targets.
Post-programme surveillance: According to the draft regulation, a country shall be subject to post-programme surveillance as long as it has not repaid 75% of its debt.