Skip to Main content Skip to Navigation
Reports

Appendix 6 : The New Member States and the Stability and Growth Pact : Needs for adapting in the prospect of euro area membership

Abstract : The New Member States (NMS) have to comply with the Stability and Growth Pact (SGP) rules: public deficits below 3% of GDP and public debts below 60% of GDP, although they cannot be subject to fines as long as they are not members of the euro area. Most of the NMS currently run higher than 3% of GDP deficits but lower than 60% of GDP debts. The implementation of the surveillance procedures had led 6 of the 12 NMS to be under an excessive deficit procedure (EDP) soon after they joined the EU. Are the SGP rules adequate for the NMS? The SGP rules were not designed for catching-up countries, but for 'old member States'. In particular, the initial rules of the SGP did not account for investment needs. A Golden rule for public finances would be especially appropriate for the NMS, since it would allow them to borrow to finance investment needs that will benefit not only current but also future generations. We argue that SGP rules are not adapted for the NMS and that better rules should be introduced in the prospect of euro area enlargement. Section 1 provides a brief assessment of the current situation of public finance criteria in the NMS. Section 2 considers the rationale of SGP framework for the NMS. Section 3 advocates for a better fiscal rule: the golden rule. Section 4 concludes.
Document type :
Reports
Complete list of metadata

Cited literature [7 references]  Display  Hide  Download

https://hal-sciencespo.archives-ouvertes.fr/hal-00972885
Contributor : Spire Sciences Po Institutional Repository Connect in order to contact the contributor
Submitted on : Thursday, April 3, 2014 - 8:08:19 PM
Last modification on : Monday, March 21, 2022 - 2:48:18 PM
Long-term archiving on: : Thursday, July 3, 2014 - 7:46:30 PM

File

efn-spring06-app-cmhs.pdf
Files produced by the author(s)

Identifiers

  • HAL Id : hal-00972885, version 1
  • SCIENCESPO : 2441/5081

Collections

Citation

Catherine Mathieu, Henri Sterdyniak. Appendix 6 : The New Member States and the Stability and Growth Pact : Needs for adapting in the prospect of euro area membership. 2006. ⟨hal-00972885⟩

Share

Metrics

Record views

78

Files downloads

147