98/308/EC: Council Decision of 1 May 1998 abrogating the Decision on the existence of an excessive deficit for Germany
Date: 1998-05-01
Institutions: Council of the European Union
Subjects: Germany, budget deficit, gross domestic product, public debt

11. 5. 98

EN

Official Journal of the European Communities

L 139/11

COUNCIL DECISION

of 1 May 1998

abrogating the Decision on the existence of an excessive deficit for Germany

(98/308/EC)

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European
Community, and in particular Article 104c(12) thereof,

Having regard to the recommendation from the Commis-
sion,

Whereas the second stage for achieving economic and
monetary union started on 1 January 1994; whereas
Article 109e(4) of the Treaty lays down that, in the second
stage, Member States shall endeavour to avoid excessive
government deficits;

Whereas there is an excessive deficit procedure which
provides for a decision on the existence of an excessive
deficit and, after the excessive deficit has been corrected,
for the abrogation of that decision; whereas, during the
second stage, the excessive deficit procedure is deter-
mined by Article 104c of the Treaty, excluding para-
graphs 1, 9 and 11; whereas the Protocol on the excessive
deficit procedure annexed to the Treaty sets out further
provisions relating to the implementation of the excessive
deficit procedure; whereas Regulation (EC) No 3605/93 (1)
lays down detailed rules and definitions for the applica-
tion of the said Protocol;

Whereas, following a recommendation from the Commis-
sion in accordance with Article 104c(6) of the Treaty, the
Council decided on 27 June 1996 that an excessive deficit
existed in Germany (2); whereas,
in accordance with
Article 104c(7), the Council made recommendations to
Germany with a view to bringing the excessive deficit
situation to an end (3);

Whereas a Council Decision on the existence of an exces-
sive deficit is to be abrogated, in accordance with the
provisions of Article 104c(12) of the Treaty, to the extent
that the excessive deficit in the Member State concerned
has, in the view of the Council, been corrected;

Whereas, when abrogating the Decision, the Council is to
act on a recommendation from the Commission; whereas,
based on the data provided by the Commission after

(1) OJ L 332, 31. 12. 1993, p. 7.
(2) OJ L 172, 11. 7. 1996, p. 26.
(3) Council

September 1997.

recommendations of 16 September 1996 and 15

reporting by Germany before 1 March 1998 in accordance
with Regulation (EC) No 3605/93, the following conclu-
sions are warranted:

The government deficit in Germany widened in 1995 and
1996, when it reached 3,4 % of GDP. The deficit was
reduced in 1997 to 2,7 % of GDP, which is below the
Treaty reference value, and a further reduction to 2,5 % of
GDP is forecast for 1998. According to the 1997 conver-
gence programme of Germany, the government deficit is
projected to decline further to 1,5 % of GDP in 2000.

The government debt ratio continued to rise until 1997
when it reached 61,3 % of GDP; the debt ratio rose to
just above the 60 % of GDP reference value in 1996 after
having increased sharply in 1995. The debt ratio is
expected to decline in 1998 and projected to continue
declining in the following years in the German conver-
gence programme.

The exceptional circumstances of German unification
continue to put a heavy burden on the German budget.
includes
Furthermore,
unification-related liabilities amounting to around 10 %
of GDP.

the German government debt

The deficit was below the Treaty reference value in 1997
and is expected to remain so in 1998 and to decline
further in the medium term. The debt ratio was slightly
above the Treaty reference value in 1997 but is expected
to start declining in 1998 and to return soon to below the
Treaty reference value,

HAS ADOPTED THIS DECISION:

Article 1

From an overall assessment it follows that the excessive
deficit situation in Germany has been corrected.

Article 2

The Council Decision of 27 June 1996 on the existence
of an excessive deficit in Germany is hereby abrogated.

L 139/12

EN

Official Journal of the European Communities

11. 5. 98

This Decision is addressed to the Federal Republic of Germany.

Article 3

Done at Brussels, 1 May 1998.

For the Council

The President

G. BROWN