The Ecofin gives a boost to the Economic Governance Package for the EU

Finance Ministers of the EU have reached an agreement on Economic Governance Package. The Polish Presidency will now complete the necessary formal procedures in order to make possible for the European Parliament to vote the package already. According to the Ecofin, the new rules will improve budgetary discipline in the Member States and strengthen stability of the EU economy.

The EU Finance Ministers have reached an agreement on the six pack draft legal acts on economic governance. The package – five regulations and one directive – has been subject to intense negotiations between the Council and the European Parliament in co-operation with the European Commission. Earlier, the Parliament had tabled over 2,000 proposals for amendments to the six draft legal acts presented by the Commission in September 2010. Finance Ministers of the EU managed to agree on the critical changes to the package which include enhancing the decision-making process of the Council in the so-called preventive part of the Stability and Growth Pact; improving the dialogue on macroeconomic issues between European institutions; surveillance of excessive macroeconomic imbalances covering countries with both current account deficits and surpluses, with their appropriate treatment.

Four of six proposals from the package deal with fiscal issues, including a reform of both preventive and corrective part of the Stability and Growth Pact. A new directive on requirements for budgetary frameworks will ensure that national budgetary frameworks reflect the objective of increasing fiscal discipline in the EU. Moreover, the surveillance of the Member States' economic policies will be broadened through introduction of a mechanism for the prevention and correction of excessive macroeconomic imbalances. A new "excessive imbalance procedure" with corresponding potential sanctions for non-compliance will be established.

According to the Council, the agreement constitutes a strong signal towards the investors and financial markets. It clearly proves Europe’s capability to respond decisively to the challenges, being a visible evidence that the EU and its institutions are able to act unequivocally. The results of the meeting of Finance Ministers allow the Polish Presidency of the EU to complete the necessary formal procedures. This will make it possible for the European Parliament to vote the package already at the September plenary session. Then the ECOFIN Council will formally adopt it on 4 October. This will enable the new economic governance rules enter into force as early as possible.