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Parliamentary questions
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7 February 2019
Answer given by Mr Moscovici on behalf of the European Commission
Question reference: E-005954/2018

1. The decision to open an excessive deficit procedure (EDP) is taken by the Council on the basis of a Commission proposal in case of non-compliance with deficit criterion (i.e. the planned or actual government deficit exceeds 3% of gross domestic product (GDP)) and/or the debt criterion (i.e. the government debt to GDP ratio exceeds the reference value of 60%, unless it is approaching it at a satisfactory pace).

Member States which are not in EDP still have to follow the requirements of the preventive arm of the Stability and Growth Pact (SGP). According to Article 126(2) of the Treaty on the Functioning of the European Union (TFEU), if a Member State does not fulfil the deficit or the debt criterion, the Commission has to prepare a report, which must also take into account ‘all other relevant factors, including the medium-term economic and budgetary position of the Member State’.

On 23 May 2018, the Commission issued a report under Article 126(3) TFEU, as Italy did not comply with the debt criterion in 2017. The report concluded that the debt criterion should be considered as complied with at the time, having regard in particular to Italy's compliance with the preventive arm of the SGP in 2017.

However, Italy's fiscal plans for 2019, as presented in the 2019 draft budgetary plan submitted on 16 October 2018 and confirmed in its revised version of 13 November 2018, entailed a ‘particularly serious non-compliance’ with the preventive arm of the SGP, as highlighted in the Commission Opinions of 23 October and 21 November 2018. This represented a material change in the relevant factors analysed by the Commission in May 2018, justifying a new assessment of compliance with the debt criterion in 2017.

On 21 November 2018, the Commission thus issued a new report concluding that the debt criterion should be considered as not complied with, and proposing the opening of a debt-based EDP. After considering the further amendments to the 2019 draft Budget Law proposed by the Italian authorities by letter on 18 December 2018, the Commission was able to conclude that the opening of an EDP is no longer warranted at this stage.

2. In implementing the provisions of the SGP, the Commission is committed to ensure equal treatment of all Member States, independently from the political orientation of their governments. All Commission assessments relating to EDPs are based on the existing regulations and reflect dedicated analyses of the specific economic and budgetary situation of each Member State.

Concerning the debt criterion, a debt ratio above the 60% reference value does not automatically imply the opening of an EDP. First, Article 126(3) TFEU specifies that a debt-to-GDP ratio above the reference value of 60% warrants a Commission report only if it is not sufficiently diminishing and approaching the reference value at a satisfactory pace — with the meaning of ‘satisfactory pace’ being precisely defined by the regulations. Second, in its report under Article 126(3) TFEU, the Commission has to consider not only the pace of debt reduction, but also all other relevant factors, including the medium-term economic and budgetary position of the Member State.

Last updated: 7 February 2019Legal notice