Communication from the Commission to the Council and the European Parliament - Strengthening economic governance and clarifying the implementation of the Stability and Growth Pact
Date: 2004-09-03
Institutions: European Commission
Subjects: development policy, economic policy, governance, legislative initiative, public finance, stability pact

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 3.9.2004 
COM(2004) 581 final 

COMMUNICATION FROM THE COMMISSION  
TO THE COUNCIL AND THE EUROPEAN PARLIAMENT 

Strengthening economic governance and clarifying the implementation of the Stability 
and Growth Pact 

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1. 

PROGRESSING  TOWARDS  BETTER  ECONOMIC  GOVERNANCE  AND  SOUND  PUBLIC 
FINANCES 

On 18 June 2004, the European Council adopted a Declaration on the Stability and Growth 
Pact  (SGP)  which  stressed  that  raising  growth  potential  and  securing  sound  budgetary 
positions are the two pillars of the economic and fiscal policy of the Union and the Member 
States.  The  present  Commission  Communication  follows  up  to  the  European  Council 
assertion that Member States look forward to the proposals of the Commission with regard to 
strengthening and clarifying the implementation of the SGP. Building on the ideas contained 
in  the  previous  Communication  of  24  June  2004  on  “Public  Finances  in  EMU  –  2004”,  it 
provides Member States with an orientation for proposals on the future set-up and functioning 
of the EU fiscal framework.  

The surveillance of fiscal discipline that has proven its effectiveness needs to be maintained 
and  rigorous  implementation  be  ensured.  In  this  regard,  the  Treaty  provisions  including  the 
reference  values  for  government  deficit  and  debt  of  3  and  60  percent  of  GDP  continue  to 
provide the necessary strong backbone of the fiscal framework and remain the anchor of the 
system. Excessive deficits should be avoided, and when they occur be corrected promptly, to 
contribute to safeguarding price stability and to ensure sustainability of public finances. The 
fiscal  framework  is  a  set  of  common  rules,  to  be  applied  equally  to  all  Member  States. 
However, in a European Union of 25 countries, characterised by considerable heterogeneity 
and diversity and given the experience of 5 years in EMU, an enriched common framework 
with a stronger emphasis on the economic rationale of its rules would allow to better cater for 
differences  in  economic  situations  across  the  EU.  The  objective  is  therefore  to  enhance  the 
economic  underpinnings  of  the  existing  framework  and  thus  strengthen  credibility  and 
enforcement. The aim is not to increase the rigidity or flexibility of current rules but rather to 
make them more effective. 

On  this  basis,  this  Communication  examines  firstly  how  the  fiscal  framework  -  and  in 
particular the Stability and Growth Pact - could respond to the shortcomings experienced so 
far through greater emphasis to economic developments in recommendations and an increased 
focus on safeguarding the sustainability of public finances.  

Secondly, this Communication addresses how the instruments for EU economic  governance 
could be better interlinked in order to enhance the contribution of fiscal policy to economic 
growth  and  support  progress 
the 
towards  realising 
Communication suggests possible improvements to the enforcement of the framework.  

the  Lisbon  strategy.  Thirdly, 

In developing this approach, the Commission takes into account the implications of the ruling 
of  the  European  Court  of  Justice  of  13  July1  that  clarified  the  respective  roles  of  the 
Commission and the Council in the application of the EU fiscal framework. The ruling also 
confirmed that a rules-based system is the best guarantee for commitments to be enforced and 
for all Member States to be treated equally.  

1 

Ruling  of  the  European  Court  of  Justice  on  the  affaire  C-27/04  by  the  Commission  of  the  European 
Communities against the Council of the European Union. 

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2. 

REFOCUSING THE STABILITY AND GROWTH PACT 

Five years of experience with the Stability and Growth Pact have highlighted its core role in 
the  budgetary  co-ordination  process.  The  SGP  has  helped  delivering  macro-economic 
stability,  which  is  also  illustrated  by  the  budgetary  trends  in  the  recent  downturn  which 
compare favourably to the past when economic downturns were typically accompanied by a 
more  pronounced  deterioration  in  underlying  budgetary  positions.  However,  over  the  past 
years tensions have accumulated in the application of the SGP, leading to a loss of credibility 
and ownership and institutional uncertainty. In addition, experience with the application of the 
framework has highlighted further possibilities to improve it. 

In  its  June  2004  Communication,  the  Commission  considered  several  elements  for 
strengthening the SGP: (i) placing more focus on debt and sustainability in the surveillance of 
budgetary  positions;  (ii)  allowing  for  more  country-specific  circumstances  in  defining  the 
medium-term  objectives  of  “close  to  balance  or  in  surplus”;  (iii)  considering  economic 
circumstances  and  developments  in  the  implementation  of  the  Excessive  Deficit  Procedure; 
(iv) ensuring earlier actions to correct inadequate budgetary developments.  

In strengthening and clarifying the framework it would be essential to secure a proper balance 
between  the  potentially  higher  degree  of  discretion  in  the  surveillance  and  co-ordination  of 
fiscal  policies  and  the  need  for  keeping  the  rules-based  framework  simple  and  transparent. 
The latter has to be applied across countries in a fair and consistent way and be understood by 
EU public opinion. In this context, the two nominal anchors - the 3% reference value for the 
deficit  to  GDP  ratio  and  the  60%  for  the  debt  to  GDP  ratio  –  have  proven  their  value  and 
continue to be the centrepiece of multilateral surveillance.  

A  strengthened  Stability  and  Growth  Pact  could  define  principles  and  general  criteria  for 
budgetary  surveillance  which  would  provide  the  basis  of  the  budgetary  co-ordination 
framework. In addition, other more specific economic-analytical tools to assess the conduct of 
budgetary surveillance could be spelled out in a Code of Conduct accompanying the revised 
SGP  in  order  to  allow  consistency  in  its  application.  The  main  elements  of  the  revised 
approach can be described as follows. 

(i) 

Placing more focus on government debt and sustainability in the surveillance of 
budgetary positions. Increased focus on sustainability entails enhanced surveillance 
of  both  current  debt  developments  as  well  as  of  factors  that  may  influence  its 
medium and long-run dynamics. It needs to be stressed however, that the increased 
focus  on  debt  developments  would  complement  continued  rigorous  attention  to 
deficit developments.  

The  increased  focus  on  public  debt  and  sustainability  of  public  finances  feeds 
through  into  three  suggestions  for  revisiting  the  SGP:  to  identify  country-specific 
medium-term budgetary objectives (see indent ii below), to render the debt criterion 
of  the  Treaty  operational  and  to  define  the  adjustment  path  in  the  excessive  deficit 
procedure  inter  alia  according  to  the  degree  of  sustainability  risks  (see  indent  iii 
below). 

As regards the debt criterion, the Stability and Growth Pact could clarify the basis on 
which  the  Treaty  provision  of  a  ‘satisfactory  pace’  of  debt  reduction  should  be 
assessed. In defining a required rate of debt reduction the need to ensure prudent debt 
ratios before the impact of ageing takes place fully and to consider country specific 

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(ii) 

initial debt levels and potential growth conditions should be taken into account. The 
latter  should  possibly  be  complemented  by  an  assessment  of  additional  factors 
related to ageing and contingent liabilities. 

An  important  element  would  be  the  definition  of  the  “satisfactory  pace  of  debt 
reduction”, which ensures to reach prudent debt ratios within a reasonable length of 
time.  The  yearly  assessment  of  debt  development  can  be  conducted  against  this 
reference  rate  of  reduction  but  taking  into  account  country-specific  current  growth 
conditions.  In  practice,  if  growth  is  below  its  potential  a  slower  pace  of  debt 
reduction  would  be  consistent  with  the  demands  of  the  framework,  while  the 
opposite would hold if growth is above its potential.  

Beyond  the  application  of  the  excessive  deficit  procedure,  increased  knowledge  is 
required of factors that affect the long-term sustainability of public finances, such as 
pension and contingent liabilities and assets. Further deepening the comprehension of 
these  developments  will  help  to  integrate  them  better  into  the  fiscal  framework.  A 
clearer  understanding  of  discrepancies  between  debt  and  deficit  figures  would  also 
allow a better qualification of the budgetary trends. 

Allowing for more country-specific circumstances in defining the medium-term 
deficit objective of “close to balance or in surplus”. The medium-term objectives 
complementing the Treaty provisions have two main goals. Firstly, they are intended 
to provide for sufficient room for manoeuvre of the budget deficit to avoid breaching 
the  3%  reference  value  during  an  economic  slowdown  without  recourse  to  pro-
cyclical  fiscal  policy.  Secondly,  adherence  to  the  medium-term  target  allows  a 
reduction  of  the  government  debt-to-GDP  ratio,  also  preparing  for  the  budgetary 
impact  of  ageing  populations.  The  operational  specification  of  the  medium-term 
budgetary objective of “close to balance or in surplus” has been left open by the SGP 
and  in  practice  a  balanced  budget  position  in  cyclically-adjusted  terms  every  year 
throughout  the  cycle  is  currently  required  for  most  Member  States.  Given  the 
increasing  economic  diversification  in  an  EU  of  25  Member  States,  uniform 
objectives for all countries do not appear appropriate and lack economic rationale.  

In addition to the aim of avoiding exceeding the deficit reference value, the medium-
term budgetary objective could be based on current debt levels, taking into account 
their  development  over  the  medium  and  long  term.  In  practice,  the  medium-term 
objective  would  be  more  stringent  (close  to  zero  or  in  surplus)  the  higher  the  debt 
level.  The  identified  budgetary  positions  should  avoid  breaching  the  3%  reference 
value under normal circumstances. However, for those countries that would be in a 
position  to  run  a  small  deficit,  the  risk  of  breaching  the  3%  during  economic 
slowdowns would increase. 

When assessing the deviation from the medium-term objective or the path to achieve 
it,  other  factors  such  as  potential  economic  growth,  inflation,  the  existing  implicit 
liabilities related to ageing populations, the impact of structural reforms or the need 
for additional net investment could be considered.  

Finally,  it  should  be  stressed  that  there  is  a  clear  trade-off  between  the  economic 
appropriateness of the definition and its complexity. In defining the guidelines to set 
up medium-term objectives and to assess the deviation from them, this trade-off has 
to be carefully considered.  

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(iii) 

Considering  economic  circumstances  and  developments  in  the  implementation 
of the Excessive Deficit Procedure. This could be done mainly in two aspects of the 
procedure:  

-  Catering  for  prolonged  periods  of  sluggish  growth  through  the  “exceptional 
circumstances clause”. The case of slow but  still  positive economic growth is not 
fully  taken  into  account  in  the  current  EU  fiscal  framework.  Improvements  in  this 
sense  can  be  achieved  through  a  rethinking  of  the  adjustment  path  once  a  country 
breaches the 3% reference value for the deficit (see below) and/or redefining the so-
called “exceptional circumstances clause”. Under the current framework, a protracted 
period  of  sluggish  growth  leading  to  a  substantial  loss  of  cumulated  output,  while 
leading  to  deficits  above  3%  of  GDP,  would  not  trigger  the  clause  on  exceptional 
circumstances  which  would  avoid  the  Member  State  being  placed  in  a  position  of 
excessive deficits.  

The Treaty foresees some exceptions to the general principle that countries recording 
deficits or debts above the reference values should be considered in excessive deficit. 
There  is  a  cumulative  condition  (exceptional  and  temporary  and  close  to  reference 
value)  that  may  justify  such  an  exception.  The  Regulation  1467/97  specifies  these 
exceptions as concerns the application of the deficit, by setting in a quite restrictive 
way the conditions for applying the so called clause for ‘exceptional circumstances’. 
In  particular,  the  Regulation  restricts  the  invocation  of  this  clause  only  to  cases  of 
negative growth, and unless this is substantial (-2%), it requires that countries should 
present  supporting  evidence.  In  order  to  cater  for  periods  where  growth  is  still 
positive,  but  for  protracted  time  very  low,  and  when  such  developments  are 
unexpected,  possible  improvements  could  include  the  redefinition  of  the  severe 
economic downturn and a clarification of the “the abruptness of the downturn” and 
“the loss of output relative to past trends”. The other two conditions (temporary and 
close to reference value) would continue to apply. 

Any changes to the definition of this clause should be examined in conjunction with 
changes  to  the  adjustment  path,  which  also  would  cater  for  protracted  slowdowns. 
The  main  difference  of  taking  protracted  slowdowns  into  account  through  the 
widening the definition of the exceptional circumstances clause rather than through 
the adjustment path is that by expanding the exceptional circumstances, the country 
breaching the 3% reference value would not be put into Excessive Deficit Procedure 
and thus would not be subject to the increased surveillance this implies, which could 
involve  the  risk  of  loosing  the  momentum  of  necessary  surveillance  in  the  right 
moment.  

- Allowing for country-specific elements in the enforcement of the correction of 
excessive deficits (the adjustment path). Under the current rules, a Member State 
which breaches the 3% deficit to GDP ratio has to correct it “in the year following its 
identification  unless  there  are  special  circumstances”  (CR  1467/97,  Art.3  §4).  The 
Regulation  fixes  other  deadlines  and  notably  for  effective  action  to  be  taken  (four 
months from the start of the procedure) and for sanctions if a Member State fails to 
comply with Council decisions (ten months from the start of the procedure). 

One-size-fits-all  deadlines  for  the  correction  of  excessive  deficits  have  basic 
limitations  because  they  do  not  permit  distinguishing  between  countries  with 
different  cyclical  developments  and  with  different  debt  levels.  This  can  lead  to 

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erroneous policy advice for instance asking for too stringent pro-cyclical adjustments 
or  creating  incentives  for  the  recourse  to  one-off  operations  in  order  to  stick  with 
deadlines. 

In  determining  an  appropriate  adjustment  path,  the  SGP  should  better  take  into 
account the economic conditions and fundamentals of a Member State breaching the 
3% reference value. This implies that the Excessive Deficit Procedure would still be 
launched once a country breaches the reference value and a rapid correction would 
continue  to  be  expected.  However,  the  pace  of  adjustment  could  differ  across 
countries  with  the  appropriate  adjustment  path  being  defined  on  the  basis  of 
economic conditions and debt levels. The reasons behind the excessive deficits and 
the  appropriateness  of  policies  should  be  taken  into  account  in  assessing  the 
situation.  In  practice,  different  approaches  can  be  explored  within  the  Treaty 
framework.  A  first  possibility 
the  “year  after 
identification”  as  the  basic  rule  for  correction,  while  allowing  countries  a  longer 
adjustment path by defining the “special circumstances clause” of the SGP. A second 
approach  would  be  that  country-specific  deadlines  become  the  basic  rule.  In  all 
cases,  it  would  be  important  to  set  a  maximum  time  limit  for  the  correction  of  the 
excessive deficit and there should be no waver for bad policies.  

to  continue  considering 

is 

In addition, the deadlines for exercising surveillance should be reconsidered, in order 
to make them more consistent with the national budgetary process Furthermore, the 
assessment  of  the  Stability  and  Convergence  Programmes  should  become  a  key 
moment  for  the  evaluation  of  budgetary  developments  and  policy  measures.  While 
maintaining the principle that countries under EDP are under enhanced surveillance, 
more emphasis in the yearly assessments of the programmes on the adjustment path 
seems warranted and can contribute to simplify the current procedures. 

The increased focus on debt should also strengthen incentives to run prudent policies 
in  good  times,  accelerating  debt  reduction.  Considering  the  debt  in  defining  an 
appropriate adjustment path for the correction of excessive deficits rewards countries 
that  have  reduced  debt  towards  prudent  values,  by  providing  more  room  of 
manoeuvre in bad times.  

(iv) 

Ensuring  earlier  actions  to  correct  inadequate  budgetary  developments. 
Experience  in  the  run-up  to  the  recent  protracted  economic  slowdown  has 
highlighted  the  need  to  conduct  prudent  and  symmetric-over-the-cycle  policies  and 
achieve  surpluses  in  good  times.  Budgetary  surveillance  should  ensure  the 
appropriate peer pressure to favour the achievement of the medium-term objectives. 
To this end, the SGP should reaffirm the commitment to run symmetric fiscal policy 
over the cycle in order to prepare for the ageing of the population, create sufficient 
room for dealing with economic slowdowns and ensure an adequate policy mix over 
the  cycle.  A  renewed  and  shared  commitment  on  these  objectives  should  increase 
Member States ownership of the SGP. 

An  efficient  working  of  the  peer  review  mechanism  in  the  preventive  part  of  the 
fiscal  surveillance  is  essential  in  delivering  the  appropriate  policies  and  budgetary 
outcomes and thus avoiding the need to activate the sanction parts of the SGP. 

The  capacity  of  the  Commission  to  issue  “early  warnings”  directly  (see  point  4 
below)  should  contribute  to  signal  early  enough,  the  need  to  take  action  to  correct 

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inadequate  budgetary  developments,  including  in  good  times  and  when  deficits  are 
not necessarily close to 3%. 

Also, the BEPGs could more effectively be used to address the issue of good policy 
in good times. If necessary recommendations concerning the implementation of the 
BEPGs could be issued if the conduct of budgetary policies appears inconsistent with 
them.  

In case a Member State’s policy implies risks as to the respect of the Treaty reference 
values,  or  for  the  sustainability  of  public  finances,  early  warnings  should  be  used 
timely.  

3. 

COORDINATING BUDGETARY POLICIES  

Placing  the  EU  surveillance  of  fiscal  policy  into  a  broader  perspective  implies  that  the 
disciplinary side must be considered at EU level together with other elements: economic and 
budgetary  policies  need  to  set  the  right  priorities  towards  economic  reforms,  innovation, 
competitiveness  and  strengthening  of  private  investment  and  consumption.  This  would 
contribute to progress towards achieving the economic objectives set in the Lisbon strategy.  

Reinforcing the link between the Broad Economic Policy Guidelines (BEPGs), the SGP and 
the  national  budgetary  processes  would  improve  the  effectiveness  of  coordination  of 
economic policies. Specifically, a simplified and more efficient contribution of the European 
surveillance to the conduct of national policies could be created by revisiting the timetable of 
the preventive part of the SGP - related to the submission and assessment of the stability and 
convergence programmes – and bringing it more in line with the national budgetary process.  

The  role  of  the  Stability  and  Convergence  programmes  could  be  reinforced.  First,  they  can 
spell  out  the  medium-term  budgetary  strategy  at  the  beginning  of  an  electoral  mandate  for 
new governments. The updates of this Programme could then become a real ex-ante exercise, 
earlier in the year. That would allow the BEPGs and the Opinions on the programmes to be 
taken into account in the preparation of national budgets by governments. The assessment of 
the implementation of the BEPGs early in the following year would conclude the annual cycle 
and set the stage for the next cycle.  

There are several advantages coming from such a revision of the economic policy calendar. 
Firstly, reorienting the Stability and Convergence Programmes towards strategic planning and 
away from the description of the annual budget bill would increase the focus of the exercise 
on the medium term. Secondly, a proper EU semester for economic policy, by increasing the 
interaction between European and national levels before a draft budget for the following year 
is  prepared  is  likely  to  increase  the  Member  States’  ownership  of  EU  policy  coordination, 
making it easier to factor common orientations into domestic policymaking. Thirdly, this shift 
could provide the possibility to involve national parliaments better and at an early stage of the 
multi-year  budgetary  planning:  this  is  likely  to  increase  the  legitimacy  of  the  EU  fiscal 
framework.  Finally,  it  could  allow  for  strengthening  the  assessment  of  implementation  -  of 
both  the  BEPGs  and  the  programmes  -  by  linking  the  analysis  made  at  the  end  of  the  year 
about the main elements of the budget just approved with the recommendations contained in 
the BEPGs concerning both the quality of public finances and the budgetary aspects of other 
recommendations. 

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4. 

IMPROVING ENFORCEMENT  

A revised design of the rules and EU processes would reinforce the economic rationale of the 
framework,  fostering  its  credibility  and  an  increased  ownership  by  Member  States. 
Addressing  additional  questions  about  the  functioning  of  the  preventive,  dissuasive  and 
corrective aspects of economic and budgetary surveillance and its relation to the institutional 
framework would also contribute to enhanced enforcement of the common rules. Enforcement 
of the EU framework and of related guidelines and recommendations could be improved both 
at national and Community level, through a clarification of the respective roles of the various 
institutions, an increased effectiveness of national budgetary procedures, and the involvement 
of all national actors. Nevertheless, enforcement in  the  context of the Treaty remains in the 
hands  of  Member  States  and  their  political  commitment  to  exert  fully  the  adequate  peer 
pressure. 

The Commission promotes the Union’s objectives and monitors the respect of the Treaty and 
Member States’ compliance with the Council recommendations, and proposes or recommends 
to the Council appropriate actions. Within the discretion limits set by the legal framework the 
Council,  using  the  political  appreciation,  has  then  the  final  decision  in  the  definition  of 
common policy guidelines or of how much and how far Council recommendations should go 
in order to induce the correction of gross errors. These principles have been reaffirmed by the 
Court ruling on 13 July 2004.The provisions introduced in the new Constitution, such as the 
“early warning” directly issued by the Commission and the Council decisions launching the 
excessive  deficit  procedure  based  on  Commission  proposals  rather  than  recommendations, 
both strengthen the economic governance system and clarify the complementary roles of the 
Council and the Commission.  

The  implementation  of  the  fiscal  framework  and  its  credibility  also  relies  on  the  quality, 
timeliness  and  reliability  of  fiscal  statistics  and  the  assessment  of  government  budgetary 
positions. An improved monitoring at the EU level of the reported data will contribute to this 
end: following the Ecofin Council Conclusions of 2 June 2004 the Commission will prepare 
minimum  European  standards  for  the  institutional  set-up  of  statistical  authorities.  The 
consistency  between  the  status  and  prerogatives  of  national  statistical  authorities  and  their 
task  of  ensuring  the  reliability  and  timeliness  of  statistics  needs  to  be  ensured.  Full 
transparency  will  allow  the  financial  markets  to  better  assess  the  creditworthiness  of  the 
different Member States. 

The dissuasive elements of budgetary coordination which centre on the use of peer pressure as 
a sanction mechanism, supported by the ultimate threat of financial penalties, is a key part of 
the EU fiscal framework.  

The  effectiveness  of  peer  pressure  to  discourage  Member  States  from  not  complying  with 
their legal obligations, in the form of naming, shaming, and, if necessary, blaming, could be 
enhanced.  Domestic  public  awareness  of  unsound  economic  policies  would  increase 
‘reputation costs’, stimulating appropriate action, thereby reducing the deficit bias stemming, 
for example, from the electoral cycle. Feeding through of reputation costs to public opinion or 
financial  markets  is  limited  in  the  current  framework  as  witnessed  in  recent  experiences. 
Moreover,  enhancing  the  functioning  of  dissuasion  and  peer  pressure  in  the  Council  would 
significantly contribute to improving the working of the coordination of fiscal policies. 

Measures  should  be  envisaged  in  order  to  lead  to  greater  transparency  and  accountability 
concerning Member State’s budgetary policies. At European level this could be pursued, as a 

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first step, by increased transparency in the surveillance activity. The Commission has already 
taken this avenue, since last year, by collecting and releasing most information related to the 
assessments of the stability and convergence programmes, but also to the implementation of 
the  Excessive  Deficit  Procedure.  The  Commission  can  take  further  steps  to  increase  the 
quantity and quality of information which it distributes and increase peer pressure on Member 
States. As an example, the Commission may present its assessment of the budgetary situation 
regularly to the European Parliament, in order to foster the debate. In this way, the European 
Parliament could contribute to the public awareness.  

There is a case for better translating the European commitments into the national level. The 
Treaty  duly  recognises  the  importance  of  national  budgetary  institutions  and  procedures  in 
delivering sound budgetary policies when it calls on Member States to ‘ensure that national 
procedures  in  the  budgetary  area  enable  them  to  meet  their  obligations’2.  Budgetary 
institutions should appropriately reflect country-specific constitutional and institutional set up.  

In  this  context,  the  role  played  in  some  Member  States  by  national  counterparts  for  the 
monitoring  function  fulfilled  by  the  Commission  at  EU  level  appears  relevant.  Following 
existing  successful  examples  of  national  bodies  as  independent  institutes  which  conduct 
surveillance of national budgetary and economic policies, and publicly provide views on their 
implementation,  Member  States  should  consider  how  such  institutions  could  fit  into  the 
national institutional set up. In  addition, a closer involvement of national parliaments in the 
coordination process could help to bolster accountability at the Member State level and thus 
increase the effectiveness of peer pressure. 

* * * 

In  the  coming  months,  the  Commission  will  -  in  consultation  with  the  Member  States  - 
continue the work to elaborate these ideas and render them operational. The Commission will 
then  present  legislative  proposals  to  implement  the  ideas  on  strengthening  economic 
governance which will contribute to the maintenance of sound public finances and fostering 
the EUs economic growth potential. 

2 

Article 3, TEC Protocol 20. The Excessive Deficit Procedure. 

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