98/311/EC: Council Decision of 1 May 1998 abrogating the Decision on the existence of an excessive deficit for Italy
Date: 1998-05-01
Institutions: Council of the European Union
Subjects: Italy, budget deficit, gross domestic product, public debt

11. 5. 98

EN

Official Journal of the European Communities

L 139/15

COUNCIL DECISION

of 1 May 1998

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

(98/311/EC)

THE COUNCIL OF THE EUROPEAN UNION,

with Regulation (EC) No 3605/93, the following conclu-
sions are warranted:

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 26 September 1994 that an excessive
deficit existed in Italy; whereas, in accordance with Article
104c(7), the Council made recommendations to Italy with
a view to bringing the excessive deficit situation to an
end (2);

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
reporting by Italy before 1 March 1998 in accordance

Since 1993,
the government deficit has been sharply
reduced to 2,7 % of GDP in 1997, which is below the
Treaty reference value; a further reduction to 2,5 % of
GDP is forecast for 1998. The new medium-term finan-
cial programme 1998-2001 recently presented to Parlia-
ment by the Italian Government plans a further reduction
of the general government deficit to 1,5 % of GDP in
2000 and 1 % of GDP in 2001.

The government debt ratio peaked in 1994 at 124,9 % of
GDP and since then has declined each year to reach
121,6 % in 1997. The new medium-term financial
programme plans a reduction of the debt ratio for 1998 to
118,2 % of GDP and a further decline in the following
years. In 2001, the debt ratio is planned to reach 107 %
of GDP. Such reduction will be helped by annual privati-
sation revenues amounting to 0,5 to 0,75 % of GDP, up
to 2001. The Italian Government also announced its
commitment to reduce the debt ratio below 100 % by
2003.

The reduction of the deficit and in particular the steady
rise in the primary surplus, which reached over 6 % of
GDP in 1997, have contributed to putting the debt ratio
on a downward path. The Italian Government has
recently reconfirmed its commitment
to keeping the
primary surplus at a level that contributes strongly to the
decline of the debt ratio. This primary surplus is essential
to maintaining the debt ratio on its sustainable downward
path.

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 has been
decreasing in the last
three years and is expected to
decline at a more rapid pace in coming years,

HAS ADOPTED THIS DECISION:

Article 1

(1) OJ L 332, 31. 12. 1993, p. 7.
(2) Council recommendations of 7 November 1994, 24 July 1995,

16 September 1996 and 15 September 1997.

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

L 139/16

EN

Official Journal of the European Communities

11. 5. 98

The Council Decision of 26 September 1994 on the existence of an excessive deficit in
Italy is hereby abrogated.

Article 2

This Decision is addressed to the Italian Republic.

Article 3

Done at Brussels, 1 May 1998.

For the Council

The President

G. BROWN