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Excessive Deficit Procedure

The Maastricht Treaty, which foresaw the creation of the Euro, organized the way multilateral fiscal surveillance is conducted within the European Union. This surveillance is based on the Excessive Deficit Procedure (EDP): it 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, to reach a decision that an excessive deficit exists in a Member State.

 

The Treaty obliges 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 Treaty.

 

These reference values are based on GFS concepts. The government deficit is the net lending / net borrowing of general government as defined in the European system of accounts (ESA95), adjusted for the treatment of interest relating to swaps. The government debt is defined as the total consolidated gross debt at nominal value in the following categories of government liabilities (defined in ESA95): currency and deposits, securities other than shares excluding financial derivatives, 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 Commission is responsible for providing the data used for the EDP, and within the Commission this task is undertaken by Eurostat. This is done on the basis of GFS 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 EDP are compiled.

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Euro area and EU28 government deficit at 3.7% and 3.9% of GDP respectively Euro area and EU28 government deficit at 3.7% and 3.9% of GDP respectively

In 2012, the government deficit of both the euro area (EA17) and the EU28 decreased in absolute terms compared with 2011, while the government debt rose in both zones. In the euro area the government deficit to GDP ratio decreased from 4.2% in 2011 to 3.7% in 2012 and in the EU28 from 4.4% to 3.9%. In the euro area the government debt to GDP ratio increased from 87.3% at the end of 2011 to 90.6% at the end of 2012 and in the EU28 from 82.3% to 85.1%.
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Last update 06.12.2012