Abstract
During the last decade, fiscal policies in the euro area and structural reforms in the European Union’s countries that experienced different fiscal problems were a priority for the EU decision-makers. The existence of sound and sustainable public finances in the EU and, in particular, in the euro area is based, on the one hand, on macroeconomic stability, and on the other hand, on balanced and sustainable economic growth. This paper focuses on capturing the recent developments in public finances, more precisely some indicators essential for assessing the health of the EU economy and of its Member States. The results of our research show an improvement of them, as a whole, as an effect of structural reforms, investments and also of responsible fiscal-budgetary policies.
Highlights
In the context of excessive macroeconomic imbalances and financial tensions in the EU, its Member States experience various situations regarding general government gross debt and general government deficit/surplus, as a percentage of gross domestic product (GDP)
Some regulatory aspects The European Union public finance, overall, face major challenges arising from the need to reduce the level of indebtedness, of the pressure on long-term expenditures and of fiscal burden which is quite high (Bucur, Dragomirescu, 2013)
In the light of the Treaty, “at least once every two years, or at the request of a Member State with a derogation, the Commission and the European Central Bank shall report to the Council on the progress made by the Member States with a derogation in fulfiling their obligations regarding the achievement of economic and monetary union” (Article 140(1))
Summary
In the context of excessive macroeconomic imbalances and financial tensions in the EU, its Member States experience various situations regarding general government gross debt and general government deficit/surplus, as a percentage of gross domestic product (GDP). In the light of the Treaty, “at least once every two years, or at the request of a Member State with a derogation, the Commission and the European Central Bank shall report to the Council on the progress made by the Member States with a derogation in fulfiling their obligations regarding the achievement of economic and monetary union” (Article 140(1)) These reports examine, among others, fiscal developments, more precisely the extent to which each Member State met the criteria of “the sustainability of the government financial position” as an achievement of “a government budgetary position without a deficit that is excessive as determined in accordance with Article 126(6)” (Treaty on the Functioning of the European Union). Governed by Article 126 of the Treaty, the excessive deficits procedure (EDP) mentions that if a Member State does not fulfil the requirements regarding fiscal discipline, the European Commission shall prepare a report when the ratio between the public deficit and the GDP exceeds the reference value, unless the ratio has decreased significantly and steadily and reaches a level close to the reference value, or if its exceedance is exceptional and temporary and the ratio remains close to the reference value, or when the ratio between public debt and GDP exceeds the reference value, unless this ratio is sufficiently diminished and approaches the reference value at a satisfactory rate
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