WRITTEN QUESTION P-2705/98

by Karla Peijs (PPE) to the Commission

(1 September 1998)

Subject: Use of statistics in the Stability Pact

Regulations (EC) 1466/97(1) and 1467/97(2) and the resolution on the Stability and Growth Pact(3) include provisions pursuant to which countries with a government deficit of more than 3 % are required to make a non-interest-bearing deposit which may, if the worst comes to the worst, be converted into a fine.

1. Can the Commission indicate the point at which and on the basis of which statistics these decisions (the implementation of the excessive deficit procedure, the requirement to make a deposit or the imposition of a fine and the lifting of the excessive deficit procedure) will be taken under the Stability Pact?

2. Can the Commission indicate what action will be taken should revised GDP figures result in a change in the amount of the deposit or fine? Can it confirm that the ultimate fine will be imposed on the basis of definitive figures? Can it confirm that, with regard to the ultimate establishment of GDP, reference will be made to Article 10(8) of Regulation (EEC) 1552/89 on the system of the Communities' own resources(4)?

3. Will the Commission take measures before Economic and Monetary Union begins on 1 January 1999 in order to clarify how Regulation 1467/97 on the Stability Pact will apply to this issue, possibly by means of a Council Decision, in order to enhance confidence in the smooth functioning of the Stability Pact?

Answer given by Mr de Silguy on behalf of the Commission

(12 October 1998)

1. Council Regulation (EC) 1467/97 of 7 July 1997 on speeding up and clarifying the implementation of the excessive deficit procedure(5) sets out clear deadlines for the main decisions to be taken under the excessive deficit procedure.

The Regulation specifies exactly when the decision on the existence of an excessive deficit must be taken. If on the basis of the data reported before 1 March of year t - in accordance with Council Regulation (EC) 3605/93 of 22 November 1993 on the application of the Protocol on the excessive deficit procedure annexed to the EC Treaty(6) - it appears that a Member State was in a situation of excessive deficit in year t-1, the Council has to decide that an excessive deficit exists within three months after the reporting, i.e. in May at the latest if the decision is based on data reported before the beginning of March. As a consequence, the Commission needs to carry out its tasks under this procedure in such a way as to allow the Council to adhere to the strict time limits imposed by the stability and growth pact.

In case the Member State concerned does not take "effective action" within seven months to correct its excessive deficit as recommended by the Council, sanctions should be applied at the latest ten months after the reporting of the data, i.e. within the calendar year in which the decision on the existence of the excessive deficit is taken if the latter is based on data reported before the beginning of March. An accelerated procedure can be used in the case of a deliberately planned excessive deficit.

The Regulation also specifies that, as soon as the Council is of the opinion, on the basis of the reported data, that the excessive deficit has been corrected, it will abrogate its decision on the existence of an excessive deficit. All outstanding sanctions will also be abrogated.

The deadlines set by the Regulation also apply when the procedure is started at a different moment or under different circumstances.

Decisions under the excessive deficit procedure must be based on Commission data, taking into account the most recent figures for government deficit, debt and nominal gross domestic product (GDP) reported by the Member States that are available at the time the decision is made. Revisions of the data may occur during successive reportings. A decision made on the basis of data that have been revised since then may have to be altered following the reporting of revised data. For example, if on the basis of revised data reported in September, it appears that, contrary to what had been reported in March, the deficit of the previous year exceeded the 3 % of GDP limit, the Commission could initiate the procedure and the Council could decide to put the Member State in question in excessive deficit. However, there is no precedent so far of a decision under the excessive deficit procedure that has been reversed on the basis of revised data.

2. The imposition of sanctions under the excessive deficit procedure can take place several years after the formal decision on the existence of an excessive deficit was taken, because this decision will not be abrogated as long as the Member State concerned has not corrected its excessive deficit. As explained above, the figures used for any decision under the excessive deficit procedure must be the most recently reported data that are available at the time the decision is made. Thus, the calculation of the amount of the sanction should be based on the most recently reported data for the government deficit and nominal GDP of the preceding year.

Revisions in the nominal GDP figures as well in the data for the government deficit may occur after the effective imposition of the sanction, i.e. once the deposit is made or once the fine is paid. Such revisions could lead to important adjustments in the amount of the sanctions.

As the regulations of the pact do not address this data revision problem directly, standard practice to deal with these issues should be followed. A general procedure to deal with data revisions has been established for the determination of the fourth resource Community budget contribution. Under the Community budget procedure, revisions of GNP data up to four years after the year in question lead to adjustments to budget contributions already paid. The same approach would be followed for pecuniary sanctions under the stability and growth pact. The level of nominal GDP to be considered is the same for the purpose of the fourth resource contribution and the excessive deficit procedure(7). Experience with the Community budget procedure shows, however, that major corrections of the GNP data mainly take place during the first year after the year concerned and that the data remain fairly stable thereafter.

3. The Commission does not intend to take legislative initiatives relating to Council Regulation (EC) 1467/97.

(1) OJ L 209, 2.8.1997, p. 1.

(2) OJ L 209, 2.8.1997, p. 6.

(3) OJ C 236, 2.8.1997, p. 1.

(4) OJ L 155, 7.6.1989, p. 1.

(5) OJ L 209, 2.8.1997.

(6) OJ L 332, 31.12.1993.

(7) Article 2 of Council Directive 89/130/EEC, Euratom of 13 February 1989 on the harmonisation of the compilation of gross national product at market prices (OJ L 49, 21.2.1989.