The Maastricht Treaty signed in 1992 foresaw the creation of the Euro. It organised the way that multilateral fiscal surveillance would be conducted within the European Union. The provisions regarding the EDP are currently defined in the 2012 consolidated version of the Treaty on the Functioning of the European Union (TFEU).
The surveillance is based on the EDP which sets out schedules and deadlines for the Council, following reports from and on the basis of opinions by the Commission and the Economic and Financial Committee, on how to judge whether an excessive deficit exists in an EU Member State.
The TFEU obliges EU Member States to comply with budgetary discipline by respecting two criteria: a deficit to GDP ratio and a debt to GDP ratio not exceeding reference values of 3% and 60% respectively, as defined in the Protocol on the EDP annexed to the TFEU.
Council Regulation (EC) No 479/2009, as amended by Council Regulation (EU) No 679/2010 and Commission Regulation (EU) No 220/2014, requires that EU Member States report EDP-related data to Eurostat twice per year at end-March and end-September. The data are reported in harmonised tables – EDP Notification Tables. These tables are designed specifically to provide a consistent framework, with a link to national budgetary aggregates and between the government net lending/net borrowing (B.9) and changes in government debt. EDP data should be fully consistent with GFS data supplied through the ESA 2010 Transmission Programme.
The reference values for government deficit and debt are based on concepts defined in the European System of Accounts (ESA 2010). The surplus (+)/deficit (-) of the general government sector is in the national accounts referred to as the net lending (+)/borrowing (-) (B.9).The government debt is defined as the total consolidated gross debt at nominal value in the following categories of government liabilities (defined in ESA 2010): currency and deposits, debt securities and loans.
The Commission's reports and opinions are based on a technical assessment by the Directorate General Economic and Financial Affairs (DG ECFIN), using data reported by Eurostat. The web site of the DG ECFIN provides further information on the EDP’s legal basis and procedures.
Role of Eurostat in EDP
The European Commission is responsible for providing the data used for the EDP, and within the European Commission this task is undertaken by Eurostat. This is done on the basis of the GFS and EDP statistics provided by the Member States. In addition, Eurostat has sole competence within the European Commission for the statistical methodological basis on which the data for the EDP are compiled.
In 2013, the government deficit of both the euro area (EA18) and the EU28 decreased in absolute terms compared with 2012, while the government debt rose in both zones. In the euro area the government deficit to GDP ratio decreased from 3.6% in 2012 to 2.9% in 2013 and in the EU28 from 4.2% to 3.2%. In the euro area the government debt to GDP ratio increased from 89.0% at the end of 2012 to 90.9% at the end of 2013 and in the EU28 from 83.5% to 85.4%.