Debt sustainability analysis as an anchor in EU fiscal rules

The Commission’s reform orientations propose that debt sustainability analysis (DSA) should serve as an anchor in EU fiscal rules. After discussing the main assumptions of DSAs in projecting public debt ratios, we analyse four critical aspects in designing such a reform: making judgement calls with regard to DSA assumptions; ensuring transparency and democratic legitimacy; promoting public investment in the context of climate goals; and tackling cross-border effects of fiscal policy, in particular related to the euro area dimension. This document was provided/prepared by the Economic Governance and EMU Scrutiny Unit at the request of the ECON Committee.