2005/184/EC: Council Decision of 5 July 2004 on the existence of an excessive deficit in Cyprus
Date: 2004-07-05
Institutions: Council of the European Union
Subjects: Cyprus, budget deficit, public finance, stability pact

9.3.2005

EN

Official Journal of the European Union

L 62/19

COUNCIL DECISION

of 5 July 2004

on the existence of an excessive deficit in Cyprus

(2005/184/EC)

Article 104(6) of the Treaty lays down that the Council
should consider any observations which the Member
State concerned may wish to make before deciding,
after an overall assessment, whether an excessive deficit
exists.

to

the

leads

overall

assessment

following
The
conclusions. The general government deficit
reached
6,3 % of GDP in 2003 in Cyprus, above the 3 % of
GDP Treaty reference value. The excess of the general
the reference value did not
government deficit over
result from an unusual event outside the control of the
Cypriot authorities, nor was it the result of a severe
economic downturn, within the meaning of
the
Stability and Growth Pact. The general government
deficit is likely to remain above 3 % of GDP in 2004.
In particular, according to the Commission Spring 2004
forecast, the deficit is projected to reach 4,6 % of GDP in
2004, while the convergence programme of Cyprus
forecasts a deficit of 5,2 % of GDP. The debt ratio,
which was 72,2 % in 2003, is likely to further diverge
from the 60 % of GDP Treaty reference value in 2004,

HAS ADOPTED THIS DECISON:

Article 1

From an overall assessment it follows that an excessive deficit
exists in Cyprus.

Article 2

This Decision is addressed to the Republic of Cyprus.

Done at Brussels, 5 July 2004.

For the Council
The President

G. ZALM

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty
Community, and in particular Article 104(6) thereof,

establishing the European

Having regard to the recommendation from the Commission,

Having regard to the observations made by Cyprus,

(5)

(6)

Whereas:

(1)

(2)

(3)

(4)

According to Article 104 of the Treaty, Member States
are to avoid excessive government deficits; this applies
also to Member States with a derogation, the case of all
countries that
joined the European Union on 1 May
2004.

sound

government

The Stability and Growth Pact is based on the objective
of
of
strengthening the conditions for price stability and for
strong sustainable growth conducive to employment
creation.

a means

finances

as

The
excessive deficit procedure under Article 104
provides for a decision on the existence of an excessive
deficit and the Protocol on the excessive deficit procedure
annexed to the Treaty sets out further provisions relating
to the implementation of the excessive deficit procedure.
Council Regulation (EC) No 3605/93 (1) of 22 November
1993 on the application of the Protocol on the excessive
deficit procedure annexed to the Treaty establishing the
European Community lays down detailed rules and defi-
nitions for the application of the provision of the said
Protocol.

Article 104(5) of the Treaty requires the Commission to
if the Commission
address an opinion to the Council
considers that an excessive deficit in a Member State
exists or may occur. Having examined all
relevant
factors taken into account in its report in accordance
with Article 104(3) and having regard to the opinion
of the Economic and Financial Committee in accordance
with Article 104(4), the Commission concluded in its
opinion of 24 June 2004 that there exists an excessive
deficit in Cyprus.

(1) OJ L 332, 31.12.1993, p. 7. Regulation as last amended by
Commission Regulation (EC) No 351/2002 (OJ L 55, 26.2.2002,
p. 23).