REPORT FROM THE COMMISSION Belgium, Bulgaria, Czechia, Germany, Estonia, Greece, Spain, France, Italy, Latvia, Lithuania, Hungary, Malta, Austria, Poland, Slovenia, Slovakia and Finland Report prepared in accordance with Article 126(3) of the Treaty on the Functioning of the European Union
Date: 2022-05-23
Institutions: Directorate-General for Economic and Financial Affairs, European Commission
Subjects: EU Member State, budget deficit, budget policy, budgetary control, budgetary expenditure, gross domestic product, macroeconomics, public debt, stability pact, structural adjustment

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 23.5.2022  COM(2022) 630 final  REPORT FROM THE COMMISSION Belgium, Bulgaria, Czechia, Germany, Estonia, Greece, Spain, France, Italy, Latvia, Lithuania, Hungary, Malta, Austria, Poland, Slovenia, Slovakia and Finland   Report prepared in accordance with Article 126(3) of the Treaty on the Functioning of the European Union  
 
 
REPORT FROM THE COMMISSION 

Belgium, Bulgaria, Czechia, Germany, Estonia, Greece, Spain, France, Italy, Latvia, 
Lithuania, Hungary, Malta, Austria, Poland, Slovenia, Slovakia and Finland  

Report prepared in accordance with Article 126(3) of the Treaty on the Functioning of 
the European Union 

1. 

INTRODUCTION    

Article 126 of the Treaty on the Functioning of the European Union (the Treaty) lays down the 
excessive deficit procedure. That procedure is further set out in Council Regulation (EC) No 
1467/97  of  7  July  1997  on  speeding  up  and  clarifying  the  implementation  of  the  excessive 
deficit procedure1, which is part of the Stability and Growth Pact.  

Coordinated  policy  action  has  cushioned  the  impact  of  the  COVID-19  pandemic  on  the 
economy since spring 2020. The activation of the general escape clause2 of the Stability and 
Growth Pact since March 2020, coupled with the temporary framework on State aid, enabled 
large-scale fiscal support in all Member States. On 23 May 2022, the Commission considered 
that the conditions to maintain the general escape clause in 2023 and to deactivate it as of 2024 
were met.3    

Previous policy recommendations 

On 20 July 2020, the Council recommended Member States to take all necessary measures in 
2020  and  2021  to  effectively  address  the  COVID-19  pandemic,  sustain  the  economy  and 
support  the  ensuing  recovery.4  Member  States  were  also  recommended,  when  economic 
conditions allowed, to pursue fiscal policies aimed at achieving prudent medium-term fiscal 
positions and ensuring debt sustainability, while enhancing investment.  

A year later, on 18 June 2021, the Council adopted fiscal policy recommendations for 2022.5 
That guidance can be summarized as follows. Member States with low/medium debt should 
pursue or maintain a supportive fiscal stance, while Member States with high debt should use 
the Recovery and Resilience Facility (RRF) to finance additional investment in support of the 

1  
2 

3 
4  

5  

OJ L 209, 2.8.1997, p. 6, as amended. 
The clause, as set out in Articles 5(1), 6(3), 9(1) and 10(3) of Council Regulation (EC) 1466/97 of 7 July 
1997  on  the  strengthening  of  the  surveillance  of  budgetary  positions  and  the  surveillance  and 
coordination of economic policies (OJ L 209, 2.8.1997, p. 1) and Articles 3(5) and 5(2) of Regulation 
(EC) 1467/97, facilitates the coordination of budgetary policies in times of severe economic downturn. 
It does not suspend the procedures of the Stability and Growth Pact. However, its activation has granted 
Member States budgetary flexibility to deal with the current crisis, by allowing for a temporary departure 
from the adjustment path towards the medium-term budgetary objective of each Member State, provided 
this does not endanger fiscal sustainability in the medium term.  
COM(2022) 600 final.  
Council Recommendations of 20 July 2020 (2020/C 282/01 to 2020/C 282/27), OJ C 282, 26.8.2020, 
p. 1-182. 
Council Recommendations of 18 June 2021 (2021/C 304/01 to 2021/C 304/28, OJ C 304, 29.7.2021 p. 1-
134). In the case of Romania the Council adopted, on the same day, a Recommendation with a view to 
bringing an end to the situation of an excessive government deficit (2021/C 304/24, 29.7.2021 p. 111-
115). 

1 

 
 
 
                                                           
recovery, while pursuing a prudent fiscal policy. All Member States should preserve nationally 
financed investment. With a view to maximising support to the recovery without pre-empting 
future fiscal  trajectories and creating  a permanent  burden on public finances, the  growth  of 
nationally  financed  current  expenditure  should  be  kept  under  control,  and  be  limited  by 
Member States with high debt. The Council also recommended that, when economic conditions 
allow, Member States pursue a fiscal policy aimed at achieving prudent medium-term fiscal 
positions and ensuring fiscal sustainability in the medium term. At the same time, investment 
should be enhanced to boost growth potential. Similarly, the Council Recommendation of 13 
July 2021 on the economic policy of the euro area indicated that fiscal policies should remain 
supportive in all euro area Member States throughout 2021.6 The Council also recommended 
euro area Member States to pursue fiscal policies that aim to achieve prudent medium-term 
fiscal positions and to ensure debt sustainability, while enhancing investment.  
On 5 April 2022, the Council Recommendation on the economic policy of the euro area7 called 
for a continued use and coordinated national fiscal policies across Member States to effectively 
underpin a sustainable and inclusive recovery. Member States should maintain a moderately 
supportive fiscal stance in 2022 across the euro area, taking into account national budgets and 
the funding provided by the  RRF.  In addition,  Member States  should  gradually pivot fiscal 
measures towards investments that promote a sustainable and inclusive recovery, consistent 
with the green and digital transitions, paying particular attention to the quality of budgetary 
measures. Reflecting the degree of uncertainty, Member States should keep fiscal policy agile 
in order to be able to react to the evolution of the COVID-19 pandemic. Fiscal policies should 
be differentiated taking into account the strength of the recovery, ensuring fiscal sustainability 
and enhancing investments, while bearing in mind the need to reduce divergences.  

Main data underlying and motivating this report 
According  to  data  validated  by  Eurostat  on  22  April  20228,  the  2021  general  government 
deficits  exceeded  the  3%  of  GDP  Treaty  reference  value  in  14  Member  States:  Belgium, 
Bulgaria,  Czechia,  Germany,  Greece,  Spain,  France,  Italy,  Latvia,  Hungary,  Malta, 
Austria, Slovenia and Slovakia.9 Actual deficits for 2021 above 3% of GDP provide prima 
facie evidence of the existence of excessive deficits in those Member States10, as defined by 
Article 126 of the Treaty.  

Based  on  their  Stability  or  Convergence  Programmes,  the  government  deficits  in  Estonia, 
Lithuania and Poland are planned to exceed 3% of GDP in 2022 (this excess is confirmed by 
the Commission’s 2022 spring forecast11). The deficits for 2022 planned in those programmes 

6 

7  

8 
9  

10  
11  

Council Recommendation of 13 July 2021 on the economic policy of the euro area, OJ C 283, 15.7.2021, 
p. 1. 
Council Recommendation of 5 April 2022 on the economic policy of the euro area, OJ C 153, 7.4.2022, 
p. 1. 
Eurostat Euro Indicators 46/2022 of 22 April 2022. 
Romania’s government deficit also exceeded 3% of GDP in 2021. However, Romania is not covered in 
this report since it is under excessive deficit procedure since the Council Decision of 3 April 2020.  
In these cases the deficits for 2022 are also planned to be above 3% of GDP. 
The source for the figures provided in this report is the Commission’s 2022 spring forecast, unless stated 
otherwise.  More 
Forecast: 
the 
https://ec.europa.eu/info/system/files/economy-finance/ip173_en.pdf 

information 

Economic 

Spring 

2022 

in 

2 

 
 
                                                           
provide prima facie evidence of the existence of an excessive deficit in those three Member 
States.  

In Belgium, Germany, Greece, Spain, France, Italy, Hungary, Austria, Slovenia, Slovakia and 
Finland,  the  general  government  gross  debt  at  the  end  of  2021  exceeded  the  60%  of  GDP 
reference value.12 Data for 2021 imply that Germany, Greece, Austria and Slovenia respected 
the  debt  reduction  benchmark  or,  in  the  case  of  Spain,  made  sufficient  progress  towards 
meeting  it.  Belgium,  France,  Italy,  Hungary  and  Finland  did  not  respect  the  debt  reduction 
benchmark in 2021. Slovakia breached the Treaty reference value of 60% of GDP at end-2021, 
having recorded a debt ratio of below 60% of GDP in the previous year. This provides prima 
facie evidence of the existence, in those six Member States (Belgium, France, Italy, Hungary, 
Slovakia and Finland), of an excessive deficit on the basis of the debt criterion.  

*** 

Against this background, the Commission has prepared this report in accordance with Article 
126(3) of the Treaty. It analysis Member States’ compliance with the deficit and debt criteria. 
It takes into account all relevant factors, including due consideration of the severe economic 
downturn resulting from the COVID-19 pandemic, the macroeconomic and budgetary impact 
of the invasion of Ukraine by Russia, and whether Member States’ policies are in line with the 
Council Recommendations. 
In its Communication of 2 March 2022,13 the Commission already announced that it would not 
propose  the  opening  of  new  excessive  deficit  procedures  in  spring  2022,  as  the  COVID-19 
pandemic continued to have an extraordinary macroeconomic and fiscal impact that, together 
with  the  invasion  of  Ukraine  by  Russia,  created  exceptional  uncertainty,  including  for 
designing a detailed fiscal adjustment path. At the same time, the monitoring of deficit and debt 
developments will continue, and the Commission will re-assess the relevance of proposing to 
open excessive deficit procedures in autumn 2022. 

12  

13  

In  Croatia,  Cyprus  and  Portugal  the  government  debt  at  end  2021  was  also  above  60%  of  GDP. 
However, these Member States are not discussed in this report as their general government deficits in 
2021  and  2022  were  (and  are  projected  to  remain)  below  3%  of  GDP  and  they  respected  the  debt 
reduction benchmark in 2021. 
COM(2022) 85 final.  

3 

 
 
 
                                                           
Table 1: Member States’ position vis-à-vis the Treaty’s deficit and debt 
reference values 

Actual deficit 
exceeeding () or 
not exceeding () 
3% of GDP in 
2021 



















Planned deficits 
exceeeding () or 
not exceeding () 
3% of GDP in 
2022 



















Debt ratio 
exceeeding () or 
not exceeding () 
60% of GDP at 
end-2021 



















Belgium 
Bulgaria 
Czechia 
Germany 
Estonia 
Greece 
Spain 
France 
Italy 
Latvia 
Lithuania 
Hungary 
Malta 
Austria 
Poland 
Slovenia 
Slovakia 
Finland 

p.m.: Member States not considered in this report
Denmark 
Ireland 
Croatia 
Cyprus 
Luxembourg 
Netherlands 
Portugal 
Sweden 
Romania* 
(*) In excessive deficit procedure since 2020. 
Source: Eurostat, Commission 2022 spring forecast and 2022 Stability and Convergence Programmes 































2. 

DEFICIT CRITERION  

Belgium, Bulgaria, Czechia, Germany, Estonia, Greece, Spain, France, Italy, Latvia, Lithuania, 
Hungary, Malta, Austria, Poland, Slovenia and Slovakia exceeded the deficit reference value 
in 2021 or plan to exceed it in 2022. 

For  all  those  Member  States,  the  deficits  in  excess  over  the  reference  value  in  2021  or  the 
planned excesses in 2022 are exceptional. In 2021, these excesses resulted from the impact on 
public  finances  of  the  economic  downturn  triggered  by  the  outbreak  of  the  COVID-19 
pandemic, and the coordinated fiscal policy response by Member States. The coordinated fiscal 
policy  support  in  2020  and  2021  was  key  to  sustain  the  economic  recovery.  In  2022,  the 
measures taken by Member States to cushion the economic and social impact of energy prices 

4 

 
 
  
 
and  to  provide  humanitarian  assistance  to  those  fleeing  Ukraine  following  the  invasion  by 
Russia also contribute to high planned deficits.  

The government deficits were above and not close to the reference value in Belgium, Bulgaria, 
Czechia, Germany, Greece, Spain, France, Italy, Latvia, Hungary, Malta, Austria, Slovenia and 
Slovakia (see Table 2).  

Estonia,  Lithuania  and  Poland  had  government  deficits  below  the  Treaty  reference  value  in 
2021, but are planning deficits above and not close to 3% of GDP in 2022; this is confirmed 
by the Commission’s 2022 spring forecast (hereafter Commission’s forecast). 

The  government  deficits  in  Bulgaria,  Germany,  Greece,  Latvia,  Lithuania,  Austria  and 
Slovakia  are  projected  to  fall  below  3%  of  GDP  in  2023  (already  in  2022  in  the  case  of 
Germany).  Therefore,  although  their  deficits  have  been  above  3%  of  GDP  since  2020,  the 
deficits in excess over the reference value are expected to be  temporary in the sense of the 
Stability  and  Growth  Pact.  These  deficit  projections  for  2022  and  2023  are,  however, 
surrounded by an exceptionally high degree of uncertainty.   

In sum, this  initial  analysis suggests that  the deficit criterion is  not  fulfilled by  17 Member 
States  before  the  consideration  of  the  relevant  factors  as  appropriate:  Belgium,  Bulgaria, 
Czechia,  Germany, Estonia,  Greece, Spain, France, Italy, Latvia, Lithuania,  Hungary, 
Malta, Austria, Poland, Slovenia and Slovakia.  

5 

 
 
 
 
 
Table 2: General government balance  

Percentage of GDP 

Belgium 
Bulgaria 
Czechia 
Germany 
Estonia 
Greece 
Spain 
France 
Italy 
Latvia 
Lithuania 
Hungary 
Malta 
Austria 
Poland 
Slovenia 
Slovakia 
Finland 

2018  2019  2020  2021  2022  2023 
-4.4 
-0.9 
-2.4 
1.7 
-3.9 
0.9 
-1.0 
1.9 
-3.7 
-0.6 
-1.0 
0.9 
-4.4 
-2.6 
-3.2 
-2.3 
-4.3 
-2.2 
-3.0 
-0.8 
-2.3 
0.5 
-4.9 
-2.1 
-4.6 
2.1 
-1.5 
0.2 
-4.4 
-0.2 
-3.4 
0.7 
-2.6 
-1.0 
-1.7 
-0.9 

-9.0 
-4.0 
-5.8 
-4.3 
-5.6 
-10.2 
-10.3 
-8.9 
-9.6 
-4.5 
-7.3 
-7.8 
-9.5 
-8.0 
-6.9 
-7.8 
-5.5 
-5.5 

-5.0 
-3.7 
-4.3 
-2.5 
-4.4 
-4.3 
-4.9 
-4.6 
-5.5 
-7.2 
-4.6 
-6.0 
-5.6 
-3.1 
-4.0 
-4.3 
-3.6 
-2.2 

-2.0 
2.1 
0.3 
1.5 
0.1 
1.1 
-3.1 
-3.1 
-1.5 
-0.6 
0.5 
-2.1 
0.6 
0.6 
-0.7 
0.4 
-1.3 
-0.9 

-5.5 
-4.1 
-5.9 
-3.7 
-2.4 
-7.4 
-6.9 
-6.5 
-7.2 
-7.3 
-1.0 
-6.8 
-8.0 
-5.9 
-1.9 
-5.2 
-6.2 
-2.6 

p.m.: Member States not considered in this report 
4.1 
2.3 
0.8 
Denmark 
0.5 
-1.9 
0.1 
Ireland 
0.2 
-2.9 
0.0 
Croatia 
1.3 
-1.7 
-3.6 
Cyprus 
2.3 
0.9 
3.0 
Luxembourg 
1.7 
-2.5 
1.4 
Netherlands 
0.1 
-2.8 
-0.3 
Portugal 
0.6 
-0.2 
0.8 
Sweden 
Romania* 
-7.1 
-4.3 
-2.8 
(*) In excessive deficit procedure since 2020. 
Source: Eurostat and Commission 2022 spring forecast  

-0.2 
-5.1 
-7.3 
-5.8 
-3.4 
-3.7 
-5.8 
-2.7 
-9.3 

0.9 
-0.5 
-2.3 
-0.3 
-0.1 
-2.7 
-1.9 
-0.5 
-7.5 

0.6 
0.4 
-1.8 
-0.2 
0.1 
-2.1 
-1.0 
0.5 
-6.3 

3. 

DEBT CRITERION  

Among  the  countries  discussed  in  this  report,  general  government  gross  debt  at  end-2021 
exceeded 60% of GDP in eleven Member States: Belgium, Germany, Greece, Spain, France, 
Italy,  Hungary,  Austria,  Slovenia,  Slovakia  and  Finland  (see  Table  3).  Compared  to  the 
previous  year,  the  government  debt  ratio  decreased  in  all  those  Member  States  except  in 
Germany and Slovakia.  

Data  show  that  in  2021  the  debt  reduction  benchmark  was  respected  in  Germany,  Greece, 
Austria and Slovenia (see Table 4). It was not respected by Belgium, France, Italy, Hungary 
and Finland. The debt reduction benchmark is computed over a three-year horizon that can be 

6 

 
 
  
 
 
forward-looking (t-1 to t+1), backward-looking (t-3 to t-1) and adjusted for the cycle.14 While 
the debt reduction benchmark cannot be meaningfully computed for Slovakia, its debt ratio is 
expected  to  decrease  to  below  60%  of  GDP  already  in  2023.  Spain,  which  is  subject  to  a 
transitional debt rule, made sufficient progress towards meeting the debt reduction benchmark 
in  2021,  as  the  change  in  the  structural  balance  was  above  their  required  minimum  linear 
structural adjustment (see Table 5 and respective notes). 

In  sum,  the  analysis  thus  suggests  that  the  debt  criterion  is  fulfilled  by  Germany,  Greece, 
Spain, Austria, Slovenia and Slovakia, while it is not fulfilled, before the consideration of the 
relevant factors, by Belgium, France, Italy, Hungary and Finland.  

Having said this, as noted in its Communication of 2 March 2022, the Commission considers, 
within its assessment of all relevant factors, that compliance with the debt reduction benchmark 
would  imply  a  too  demanding  frontloaded  fiscal  effort  that  risks  to  jeopardise  growth. 
Therefore, in the view of the Commission, compliance with the debt reduction benchmark is 
not warranted under the current exceptional economic conditions.  

14  

If,  in  any  of  the  years,  the  debt  ratio  is  below  60%  of  GDP,  the  benchmark  cannot  be  meaningfully 
computed. This is the case when Member States cross the reference value from below to above 60% of 
GDP, notably in the case of Slovakia.  

7 

 
 
 
 
                                                           
Table 3: General government debt 

Percentage of GDP 

Belgium 
Bulgaria 
Czechia 
Germany 
Estonia 
Greece 
Spain 
France 
Italy 
Latvia 
Lithuania 
Hungary 
Malta 
Austria 
Poland 
Slovenia 
Slovakia 
Finland 

24.7 
37.7 
68.7 
19.0 

25.3 
42.8 
66.4 
20.9 

2018  2019  2020  2021  2022  2023 
97.7  112.8  108.2  107.5  107.6 
99.8 
25.6 
25.1 
20.0 
22.1 
44.0 
41.9 
30.1 
32.1 
64.5 
69.3 
58.9 
61.2 
8.2 
23.5 
18.1 
8.6 
186.4  180.7  206.3  193.3  185.7  180.4 
100.5  98.3  120.0  118.4  115.1  113.7 
97.8 
97.4  114.6  112.9  111.2  109.1 
134.4  134.1  155.3  150.8  147.9  146.8 
46.5 
37.1 
43.1 
33.7 
76.1 
69.1 
59.5 
43.7 
77.5 
74.1 
49.8 
48.8 
72.7 
70.3 
58.3 
49.6 
66.6 
59.8 

47.0 
42.7 
76.4 
58.5 
80.0 
50.8 
74.1 
61.7 
65.9 

44.8 
44.3 
76.8 
57.0 
82.8 
53.8 
74.7 
63.1 
65.8 

36.7 
35.9 
65.5 
40.7 
70.6 
45.6 
65.6 
48.1 
59.6 

43.3 
46.6 
79.6 
53.4 
83.3 
57.1 
79.8 
59.7 
69.0 

42.1 
58.4 
87.3 

36.7 
56.0 
79.8 

p.m.: Member States not considered in this report 
Denmark 
Ireland 
Croatia 
Cyprus 
Luxembourg 
Netherlands 
Portugal 
34.9 
Sweden 
Romania* 
35.3 
(*) In excessive deficit procedure since 2020. 
Source: Eurostat and Commission 2022 spring forecast  

33.9 
34.0 
45.5 
63.1 
73.1 
73.3 
88.8 
98.4 
25.1 
20.8 
50.9 
52.4 
121.5  116.6  135.2  127.4  119.9  115.3 
30.5 
38.9 
52.6 
34.7 

33.6 
34.9 
57.2 
50.3 
75.3 
71.1 
91.1  115.0  103.6  93.9 
24.7 
22.3 
51.4 
48.5 

33.8 
50.9 

24.4 
52.1 

36.7 
48.8 

24.8 
54.3 

39.6 
47.2 

8 

 
 
  
 
Table 4: Gap to the debt reduction benchmark1 
A negative gap means compliance with the debt reduction benchmark 

Percentage of GDP 

Belgium 
Germany 
Greece 
France 
Italy 
Hungary 
Austria 
Slovenia 
Slovakia 
Finland 

2018 
0.1 
-6.4 
Transitional debt rule 

2019 
-0.4 
Debt < 60%  

Transitional debt rule 

6.9 
-3.7 
-5.8 
Transitional debt rule 

6.9 
-5.3 
-6.0 
-7.2 
Debt < 60% 

Debt < 60% 

2020 
5.6 
n.a.2 
5.0 

9.2 
3.6 
2.8 
1.9 

n.a.2 

2021 
2.9 
-2.8 
-1.3 
1.4 
4.4 
0.3 
-2.3 
-1.8 
n.a.2 
0.4 

2022 
-0.1 
-3.1 
0.2 
0.9 
2.1 
-1.4 
-3.3 
0.2 

2023 
2.9 
-2.8 
-1.3 
1.4 
4.4 
0.3 
-2.3 
-1.8 

Debt < 60% 

0.4 

-0.2 

-3.8 
-3.3 

Transitional debt rule 

p.m.: Member States not considered in this report 
-4.6 
Croatia 
Cyprus 
Transitional debt rule 
Portugal 
Source: Commission 2022 spring forecast and own calculations. 
1 The debt reduction benchmark, for the Member States with a debt in excess of 60% of GDP, is computed over a three-year horizon 
that can be forward-looking (t-1 to t+1), backward-looking (t-3 to t-1) and adjusted for the cycle. The table shows the difference between 
the debt-to-GDP ratio and the debt benchmark. If negative, the projected debt-to-GDP ratio complies with the debt reduction benchmark. 
In that case, the differential with respect to the reference value decreased over a three-year horizon (forward- or backward-looking) at 
least at an average rate of 1/20th. 
2 The debt reduction benchmark is not pertinent in the first year when a Member State’s debt increases to above 60% of GDP as neither 
the backward- nor the forward-looking benchmarks can be meaningfully computed.   

-5.5 
-10.8 
-5.5 

-5.5 
-10.8 
-5.5 

-6.2 
-10.6 
-8.3 

-2.4 
-5.3 
-0.2 

Table 5: Compliance with the transitional debt rule 

Required Minimum 
Linear Structural 
Adjustment  
(MLSA)3 
2020 
-1.9 

Change in structural 
balance3 

Gap to the debt reduction 
benchmark4 

2021 
n.r. 2 

2019 
-1.1 

2021 
-5.5 

2020 
-0.4 

2021 
0.4 

2018 
EDP1 

2019 
-1.3 
Spain 
Source: Commission 2022 spring forecast and own calculations. 
1 Under excessive deficit procedure 
2 Spain corrected its excessive deficit in 2018 and therefore was in the transition period until end-2021, i.e. it is not assessed on the basis 
of the debt reduction benchmark, but according to the minimum linear structural adjustment.  
3 Applicable during the transition period of three years after the correction of the excessive deficit, for excessive deficit procedures that 
were ongoing in November 2011. The MLSA defines the remaining annual structural adjustment over the transition period, which would 
ensure that Member States comply with the debt reduction benchmark at the end of those three years. If the change in structural balance 
is above the required MLSA, then the Member State complies with the transitional debt rule. 
4 The debt reduction benchmark, for the Member States with a debt in excess of 60% of GDP, is computed over a three-year horizon 
that can be forward-looking (t-1 to t+1), backward-looking (t-3 to t-1) and adjusted for the cycle. The table shows the difference between 
the debt-to-GDP ratio and the debt benchmark. If negative, the projected debt-to-GDP ratio complies with the debt reduction benchmark. 
In that case, the differential with respect to the reference value decreases over a three-year horizon (forward- or backward-looking) at 
least at an average rate of 1/20th. 

2023 
1.5 

2022 
-5.6 

9 

 
 
 
 
 
 
 
  
 
  
 
 
 
4. 

RELEVANT FACTORS  

Article  126(3)  of  the  Treaty  provides  that  this  report  must  “take  into  account  whether  the 
government deficit exceeds government investment expenditure and take into account all other 
relevant factors, including the medium-term economic and budgetary position of the Member 
State”.  

Those factors are further clarified in Article 2(3) of Regulation (EC) No 1467/97, which also 
provides  that  “any  other  factors  which,  in  the  opinion  of  the  Member  State  concerned,  are 
relevant in order to comprehensively assess compliance with the deficit and debt criteria and 
which the Member State has put forward to the Council and to the Commission” need to be 
given due consideration. In particular, that Article indicates that the medium-term debt position 
can also be considered as a relevant factor.  

Hence,  in  addition  to  the  horizontal  relevant  factors  (section  4.1),  country-specific  relevant 
factors are considered. Those include the medium-term economic position, the medium-term 
budgetary position (including public investment), the medium-term debt position, whether the 
Member  State  is  experiencing  macroeconomic  imbalances  or  excessive  macroeconomic 
imbalances, and any other relevant factors put forward by the Member States.   

As specified in Article 2(4) of Regulation (EC) No 1467/97, as regards compliance with the 
deficit criterion,  those relevant  factors can be taken into account  in  the steps leading to  the 
decision on the existence of an excessive deficit on the basis of the deficit criterion, but only 
if: 

a)  the government debt-to-GDP ratio does not exceed the 60% reference value, or 
b)  if it does, a double condition is met – i.e. that the deficit remains close to the reference 

value and that its excess over the reference value is temporary. 

Of the Member States exceeding the deficit reference value in 2021, or planning to exceed that 
value  in  2022,  the  debt  ratio  did  not  exceed  the  60%  reference  value  in  the  case  of  seven 
Member States: Bulgaria, Czechia, Estonia, Latvia, Lithuania, Malta and Poland.  

In the remaining 10 Member States exceeding the 3% of GDP deficit reference value  – i.e. 
Belgium, Germany, Greece, Spain, France, Italy, Hungary, Austria, Slovenia and Slovakia – 
the debt-to-GDP ratio exceeded the 60% reference value and the double condition necessary 
for relevant factors to be taken into account has not been met. Their deficits did not (or are not 
expected  to)  remain  close  to  the  reference  value  in  these  10  Member  States.  In  the  case  of 
Belgium, Spain, France, Italy, Hungary and Slovenia, the excess over the reference value is 
expected not to be temporary either. Therefore, for these 10 Member States, relevant factors 
cannot be taken into account in the steps leading to the decision on the existence of an excessive 
deficit on the basis of the deficit criterion.  

Concerning the apparent breach of the debt criterion by Belgium, France, Italy, Hungary and 
Finland, Article 2(4) of Regulation (EC) No 1467/97 provides that relevant factors shall always 
be taken into account when assessing compliance on the basis of the debt criterion, irrespective 
of the size of the breach. 

The several relevant factors are discussed hereunder even if they cannot be taken into account 
in the steps leading to the decision on the existence of an excessive deficit on the basis of the 
deficit criterion.  

10 

 
 
4.1. 

HORIZONTAL RELEVANT FACTORS 

A key factor to take into consideration for all the Member States covered in this report is the 
economic  and  budgetary  impact  of  the  COVID-19  pandemic  and  the  fiscal  response.  The 
pandemic and the related severe economic downturn have led to the activation of the general 
escape clause of the Stability and Growth Pact and to the Council Recommendations of 13 and 
20  July  2020  for  Member  States15  to  take  all  necessary  measures  to  effectively  address  the 
COVID-19 pandemic, sustain the economy and support the ensuing recovery. 

The outbreak of the COVID-19 pandemic in March 2020 caused a public health crisis, which 
entailed a sharp decline in economic activity only partially cushioned by the effect of automatic 
stabilisers.  Member  States  faced  an  imperative  of  addressing  the  public  health  emergency, 
supporting  households  and  corporates,  and  providing  general  support  to  their  economies. 
Significant  liquidity  support  measures  and  state  guarantees  have  also  been  adopted  by  the 
Member States.16 

The forceful fiscal policy support at the national and at EU levels backed the improvement in 
economic conditions in 2021. Based on the latest data, cumulated fiscal support in the Union 
in 2020-202117 is estimated at 11.6% of GDP (and at 11.9% of GDP in the euro area).  

The fiscal stance18 in the EU as a whole – including public expenditure financed by grants from 
the RRF and other EU funds19 – is estimated to have been expansionary by 0.1% of GDP in 
2020 and 0.9% in 2021.  

Moreover, Russia’s invasion of Ukraine since February 2022 implies that the economic and 
budgetary outlook for 2022 and beyond is subject to extraordinary economic uncertainty. It has 
made  millions  of  people  flee  their  country  to  safety,  requiring  support  from  the  social, 
education and health systems of the Member States. Significantly higher energy, raw materials 
and  food  prices,  and  increasing  supply  disruptions  also  have  an  impact  on  macroeconomic 
conditions. All these factors together with increased cost of defence expenditure put pressure 
on public finances.  

15  
16  

17  

18  

19    

Council Recommendation of 13 July 2020 is only relevant for the euro area Member States.   
These liquidity support measures, in particular public guarantees in support of credit flows, do not have 
a direct budgetary impact unless and until they are called. 
Fiscal support in 2020-2021 can be measured by the cumulated annual change in the primary balance in 
2020 and 2021 compared to 2019, plus the fiscal impulse provided by the EU funds. 
Following the approach in the Council Recommendation of 18 June 2021, the fiscal stance is currently 
best measured as the change in primary expenditure (net of discretionary revenue measures), excluding 
COVID-19  crisis-related  temporary  emergency  measures  but  including  expenditure  financed  by  non-
repayable support (grants) from  the  Recovery and Resilience Facility and other EU funds, relative  to 
medium-term  potential  growth.  Going  beyond  the  overall  fiscal  stance,  in  order  to  assess  whether 
national fiscal policy is prudent and its composition is conducive to a sustainable recovery consistent 
with the green and digital transitions, attention is also paid to the evolution of nationally financed primary 
current  expenditure  (net  of  discretionary  revenue  measures  and  excluding  COVID-19  crisis-related 
temporary emergency measures) and investment. 
Excluding COVID-19 temporary emergency measures. 

11 

 
 
                                                           
4.2. 

COUNTRY-SPECIFIC RELEVANT FACTORS  

This section provides an assessment of country-specific relevant factors. These factors include 
the  medium-term  macroeconomic  outlook,  the  medium-term  budgetary  position  (including 
public investment; see Table 6), the medium-term debt position, whether the Member State is 
experiencing  macroeconomic  imbalances  or  excessive  macroeconomic  imbalances,  and  any 
other  relevant  factors  put  forward  by  Member  States  in  accordance  with  Article  2(3)  of 
Regulation (EC) No 1467/97.   

information  on 

the  country-specific  sections 

While 
the  medium-term 
include  key 
macroeconomic  position,  including  on  the  contributions  to  growth,  more  detail  on  the 
macroeconomic developments can be found in the Commission’s forecast. Further information 
regarding  the  budgetary  measures  and  the  debt  sustainability  analysis  discussed  for  each 
Member  State  hereunder  is  included  in  the  Commission  Recommendations  for  Council 
Recommendations providing Opinions on the 2022 Stability or Convergence Programmes and 
the accompanying Fiscal Statistical Tables, as well as in the 2022 Country Reports. The debt 
sustainability analysis has been updated compared to the 2021 Fiscal Sustainability Report20 by 
reflecting the Commission’s forecast.   

The  war  has  dramatically  changed  the  picture,  by  bringing  renewed  disruptions  in  global 
supply, fuelling further commodity price pressures and heightening uncertainty. According to 
the Commission’s forecast, real GDP in the EU is set to slow from an estimated 5.4% in 2021 
to 2.7% in 2022 and 2.3% 2023. Inflation is projected to be higher and remain elevated for 
longer than previously expected, driven by commodity price increases and broadening price 
pressures.  

In 2021, the government deficit for the EU and euro area as a whole decreased to 4.7% of GDP 
and 5.1% respectively (a reduction of around 2 percentage points of GDP, in both cases). It is 
projected to continue to decrease to 3.6% and 3.7% of GDP in 2022 for the EU and euro area 
as a whole, respectively, and to decrease further in 2023 to 2.5% of GDP. 

The deficit decrease in 2021 was mainly due to the economic recovery and the unwinding of 
much  of  the  discretionary  policy  support  activated  to  combat  the  effects  of  the  COVID-19 
pandemic crisis. Moreover, revenue developments were favourable in 2021. The only Member 
States, of those considered in this report, for whom the deficit ratio did not decrease in 2021 
were Bulgaria, Czechia, Latvia and Slovakia, as measures to support the economy during the 
COVID-19  crisis  remained  in  place.  In  2022,  among  the  Member  States  considered  in  this 
report,  the  deficit  ratio  is  forecast  to  increase  for  Estonia,  Lithuania  and  Poland,  mostly 
reflecting additional spending on measures mitigating the impact of energy price rises and the 
cost of aid to the displaced persons from Ukraine.  

Following  the  deficit-decreasing  trend  and  the  economic  recovery,  the  government  debt  is 
expected to decrease over the forecast horizon for the EU and euro area as a whole. The debt-
to-GDP ratio in the EU fell from 91.7% in 2020 to 89.7% in 2021 (99.2% and 97.4% for the 
euro area, respectively), and is projected to decrease further to 87.1% and 85.2% in 2022 and 
2023 (94.7% and 92.7% for the euro area, respectively). From the Member States considered 
in  this  report,  the  government  debt  ratio  did  not  decrease  in  2021  for  Bulgaria,  Czechia, 
Germany, Latvia, Malta and Slovakia.    

20  

Fiscal Sustainability Report 2021 (April 2022), European Economy-Institutional Papers 171. 

12 

 
 
                                                           
Table 6: Public investment 

Percentage of GDP 

Belgium 
Bulgaria 
Czechia 
Germany 
Estonia 
Greece 
Spain 
France 
Italy 
Latvia 
Lithuania 
Hungary 
Malta 
Austria 
Poland 
Slovenia 
Slovakia 
Finland 

2018  2019  2020  2021  2022  2023 
2.8 
2.6 
5.4 
3.1 
5.2 
4.1 
2.8 
2.4 
6.8 
5.3 
4.8 
3.2 
2.6 
2.1 
3.6 
3.4 
3.7 
2.1 
5.8 
5.6 
3.3 
3.2 
5.9 
5.8 
4.2 
3.2 
3.3 
3.1 
3.9 
4.7 
6.3 
3.7 
5.1 
3.7 
4.5 
4.3 

2.8 
5.0 
4.9 
2.7 
6.3 
4.8 
2.7 
3.6 
3.2 
6.1 
3.7 
5.4 
4.1 
3.7 
4.2 
5.7 
4.2 
4.4 

2.6 
3.3 
4.4 
2.4 
5.0 
2.5 
2.1 
3.7 
2.3 
5.1 
3.1 
6.2 
3.8 
3.1 
4.3 
3.8 
3.6 
4.4 

2.7 
3.3 
4.7 
2.5 
5.7 
3.6 
2.7 
3.6 
2.9 
5.2 
3.2 
5.8 
4.2 
3.5 
4.1 
4.7 
3.2 
4.1 

2.7 
3.8 
4.9 
2.6 
5.8 
3.1 
2.6 
3.7 
2.6 
5.7 
4.1 
6.4 
4.5 
3.3 
4.5 
4.1 
3.5 
4.9 

p.m.: Member States not considered in this report 
3.2 
Denmark 
2.3 
Ireland 
4.3 
Croatia 
2.5 
Cyprus 
4.1 
Luxembourg 
3.4 
Netherlands 
1.8 
Portugal 
4.9 
Sweden 
Romania* 
3.5 
(*) In excessive deficit procedure since 2020. 
Source: Eurostat and Commission 2022 spring forecast  

3.6 
2.3 
5.6 
2.8 
4.7 
3.6 
2.2 
5.0 
4.6 

3.4 
2.0 
3.5 
4.9 
3.9 
3.4 
1.8 
4.9 
2.7 

3.5 
2.0 
4.8 
2.7 
4.0 
3.3 
2.5 
4.8 
4.2 

3.5 
2.3 
5.3 
2.7 
4.1 
3.3 
3.1 
4.8 
5.9 

3.8 
2.3 
5.7 
2.6 
4.2 
3.4 
3.4 
4.8 
6.0 

13 

 
 
 
  
 
  
 
 
 
 
4.2.1.  BELGIUM 

Medium-term macroeconomic position: After a contraction of 5.7% in 2020, the economy 
grew by 6.2% in 2021 and is expected to grow by 2% in 2022 and 1.8% in 2023. Growth in 
2022 is mainly driven by private and public consumption. Economic activity has exceeded its 
annual 2019 level in 2021. 

Medium-term budgetary position, including investment: The government deficit decreased 
from 9% in 2020 to 5.5% of GDP in 2021. It is projected to be at 5% and 4.4% of GDP in 2022 
and  2023,  respectively.  After  increasing  to  2.7%  of  GDP  in  2020,  government  investment 
remained stable in 2021 and is projected to increase to 2.8% of GDP in 2022. Fiscal support – 
as  measured  by  the  cumulated  annual  change  in  the  primary  balance  in  2020  and  2021 
compared to 2019 plus the fiscal impulse provided by the EU funds – is estimated at 11.3% of 
GDP,  including  discretionary  budgetary  measures  and  the  operation  of  the  automatic 
stabilisers.  The  measures  taken  by  Belgium  in  2021  have  been  in  line  with  the  Council 
Recommendation of 20 July 2020.  

In  2022,  based  on  the  Commission’s  2022  spring  forecast  and  including  the  information 
incorporated  in  Belgium’s  2022  Stability  Programme,  the  fiscal  stance  is  projected  to  be 
supportive at -2.4% of GDP.21 Belgium plans to provide continued support to the recovery by 
making use of the RRF to finance additional investment as recommended by the Council. The 
positive contribution to economic activity of expenditure financed by RRF grants and other EU 
funds is projected to increase by 0.2% percentage points of GDP compared to 2021. Nationally 
financed investment is projected to provide a neutral contribution to the fiscal stance in 2022. 
Therefore, Belgium plans to preserve nationally financed investment, as recommended by the 
Council. At the same time, the growth in nationally financed primary current expenditure (net 
of new revenue measures) in 2022 is projected to provide an expansionary contribution of 2.1 
percentage  points  to  the  overall  fiscal  stance.  This  significant  expansionary  contribution 
includes the additional impact of the measures to address the economic and social impact of 
the increase in energy prices (0.5% of GDP) as well as the costs to offer temporary protection 
to displaced persons from Ukraine (0.1% of GDP). Furthermore, the increase in government 
spending due to the automatic indexation of public sector wages and social benefits, and to a 
lower extent to higher government consumption of goods and services, are also projected to 
contribute  to  the  expansionary  contribution  of  nationally  financed  (net)  primary  current 
expenditure.  Based  on  the  Commission’s  forecast,  these  measures  and  drivers  of  higher 
expenditure are not fully matched by offsetting measures. 

Medium-term debt position: The government debt increased from 97.7% at the end of 2019 
to 112.8% of GDP at the end of 2020. It stood at 108.2% of GDP at the end of 2021 and it is 
projected at 107.5% and 107.6% of GDP at the end of 2022 and 2023, respectively. Overall, 
the debt sustainability analysis indicates high risks over the medium term.22 According to the 
baseline  10-year  projection,  the  general  government  debt  ratio  would  stay  around  108%  of 
GDP until 2026. However, as of 2027 the debt ratio would start to increase to 117% of GDP in 
2032.  The  baseline  debt  trajectory  is  sensitive  to  macroeconomic  shocks.  According  to  the 
stochastic  projections,  which  simulate  a  large  range  of  possible  temporary  shocks  to 

21 

22  

A negative (positive) sign of the indicator corresponds to an excess (shortfall) of primary expenditure 
growth  compared  with  medium-term  economic  growth,  indicating  an  expansionary  (contractionary) 
fiscal policy. 
SWD(2022) 602 final, Annex on Debt Sustainability Analysis. 

14 

 
 
                                                           
macroeconomic variables, it is probable that the debt ratio would be higher in 2026 than in 
2021. There are other factors relevant for an overall assessment of debt sustainability. On the 
one  hand,  risks-mitigating  factors  include  the  lengthening  of  debt  maturity  in  recent  years, 
relatively stable financing sources (with a diversified and large investor base), government debt 
being  fully  denominated  in  euro  and  historically  low  borrowing  costs.  In  addition,  the 
implementation  of reforms  under the Next  Generation EU, notably the RRF, is  expected to 
have a positive and lasting impact on GDP growth, which should strengthen debt sustainability. 
On  the  other  hand,  risk-increasing  factors  relate  to  the  share  of  short-term  debt,  high  and 
expected to rise gross financing needs, the large share of government debt held by non-residents 
and the lack of fiscal coordination among the different government levels, with several of the 
federated entities displaying specific vulnerabilities. 

Other  factors  put  forward  by  the  Member  State:  On  9  May  2022,  Belgium  provided 
additional relevant  factors not  yet mentioned  above. Namely, it emphasises that emergency 
support and reconstruction costs related to the floods that hit the country in July 2021 amounted 
to an estimated 0.4% of GDP in 2021 and to 0.1% of GDP in 2022. It also refers to a recently 
adopted labour market reform aiming at improving training and skills, allowing for a better 
reconciliation of private and professional life, and facilitating job-to-job transitions, and which 
could contribute to raise the employment rate. Finally, it mentions the government’s intention 
to pursue several structural reforms that can potentially improve the public finance situation, 
including reforming the pension and tax systems, implementing spending reviews and raising 
the level of public investment. 

4.2.2.  BULGARIA  

Medium-term macroeconomic position: After a contraction of 4.4% in 2020, the economy 
grew by 4.2% in 2021 and is expected to grow by 2.1% in 2022 and 3.1% in 2023. Growth in 
2022 is mainly driven by private consumption and investment. Economic activity is forecast to 
return to its annual 2019 level in 2022. 

Medium-term budgetary position, including investment: The government deficit increased 
from 4% in 2020 to 4.1% of GDP in 2021. It is projected to be at 3.7% and 2.4% of GDP in 
2022 and 2023, respectively. After increasing to 3.8% of GDP in 2020, government investment 
decreased to 3.3% of GDP in 2021 and is projected to increase to 5% of GDP in 2022, with the 
latter being larger than the government deficit in 2022. Fiscal support – as measured by the 
cumulated annual change in the primary balance in 2020 and 2021 compared to 2019 plus the 
fiscal  impulse  provided  by  the  EU  funds  –  is  estimated  at  14.9%  of  GDP,  including 
discretionary budgetary measures and the operation of the automatic stabilisers. The measures 
taken by Bulgaria in 2021 have been in line with the Council Recommendation of 20 July 2020.  

In  2022,  based  on  the  Commission’s  2022  spring  forecast  and  including  the  information 
incorporated in Bulgaria’s 2022 Convergence Programme, the fiscal stance is projected to be 
supportive  at -3.4%  of  GDP,  as  recommended  by  the  Council.  Bulgaria  plans  to  provide 
continued support to the recovery by making use of the RRF to finance additional investment 
as recommended by the Council. The positive contribution to economic activity of expenditure 
financed by RRF grants and other EU funds is projected to increase by 1.1 percentage points 

15 

 
 
 
of  GDP  compared  to  2021.23  Nationally  financed  investment  is  projected  to  provide  an 
expansionary  contribution  to  the  fiscal  stance  of  1.1  percentage  points  of  GDP  in  2022. 
Therefore, Bulgaria plans to preserve nationally financed investment, as recommended by the 
Council. At the same time, the growth in nationally financed primary current expenditure (net 
of new revenue measures) in 2022 is projected to provide an expansionary contribution of 1.4 
percentage  points  to  the  overall  fiscal  stance.  This  significant  expansionary  contribution 
includes the additional impact of the measures to address the economic and social impact of 
the  increase  in  energy  prices  (0.2  percentage  points  of  GDP)  as  well  as  the  costs  to  offer 
temporary protection to displaced persons from Ukraine (0.1 percentage point of GDP), while 
pension system amendments (0.6%) and wage increases (0.3% of GDP) are also projected to 
contribute  to  the  growth  in  net  current  expenditure.  Therefore,  on  the  basis  of  current 
Commission  estimates,  Bulgaria  does  not  sufficiently  keep  under  control  the  growth  of 
nationally financed current expenditure in 2022. 

Medium-term debt position: The government debt increased from 20% at the end of 2019 to 
24.7% of GDP at the end of 2020. It stood at 25.1% of GDP at the end of 2021 and it is projected 
at  25.3%  and  25.6%  of  GDP  at  the  end  of  2022  and  2023,  respectively.  Overall,  the  debt 
sustainability analysis indicates medium risks over the medium term.24 The implementation of 
reforms  under  the  Next  Generation  EU,  notably  the  RRF,  is  expected  to  have  a  substantial 
positive and long-lasting impact on GDP growth in the coming years, which should contribute 
to strengthening debt sustainability. 

Other factors put forward by the Member State: The analysis presented in  the previous 
sections already covers the key factors put forward by Bulgaria on 10 May 2022. 

4.2.3.  CZECHIA 

Medium-term macroeconomic position: After a contraction of 5.8% in 2020, the economy 
grew by 3.3% in 2021 and is expected to grow by 1.9% in 2022 and 2.7% in 2023. Growth in 
2022 is mainly driven by private consumption and investment. Economic activity is forecast to 
return to its annual 2019 level in 2023. 

Medium-term budgetary position, including investment: The government deficit increased 
from 5.8% in 2020 to 5.9% of GDP in 2021. It is projected to be at 4.3% and 3.9% of GDP in 
2022 and 2023, respectively. After increasing to 4.9% of GDP in 2020, government investment 
decreased to 4.7% of GDP in 2021 and is projected to increase to 4.9% of GDP in 2022, with 
the latter being larger than the government deficit in 2022. Fiscal support – as measured by the 
cumulated annual change in the primary balance in 2020 and 2021 compared to 2019 plus the 
fiscal  impulse  provided  by  the  EU  funds  –  is  estimated  at  14.3%  of  GDP,  including 
discretionary budgetary measures and the operation of the automatic stabilisers. The measures 
taken by Czechia in 2021 have been in line with the Council Recommendation of 20 July 2020.  

In  2022,  based  on  the  Commission’s  2022  spring  forecast  and  including  the  information 
incorporated in Czechia’s 2022 Convergence Programme, the fiscal stance is projected to be 
broadly neutral at +0.1% of GDP, while Council recommended a supportive stance. Czechia 
plans  to  provide  continued  support  to  the  recovery  by  making  use  of  the  RRF  to  finance 

23  

24 

The Commission adopted a positive assessment of Bulgaria's Recovery and Resilience Plan on 7 April 
2022. 
SWD(2022) 603 final, Annex on Debt Sustainability Analysis. 

16 

 
 
 
                                                           
additional investment as recommended by the Council. The positive contribution to economic 
activity of expenditure financed by RRF grants and other EU funds is projected to increase by 
1.0 percentage point of GDP compared to 2021. Nationally financed investment is projected to 
provide  a  contractionary  contribution  to  the  fiscal  stance  of  0.6  percentage  points  in  2022. 
Therefore, Czechia does not plan to preserve nationally financed investment. At the same time, 
the growth in nationally financed primary current expenditure (net of new revenue measures) 
in 2022 is projected to provide a contractionary contribution of 0.7 percentage points to the 
overall  fiscal  stance.  This  includes  the  additional  impact  of  the  measures  to  address  the 
economic and social impact of the increase in energy prices (0.03% of GDP) as well as the 
costs to offer temporary protection to displaced persons from Ukraine (0.4 % of GDP). 

Medium-term debt position: The government debt increased from 30.1% at the end of 2019 
to 37.7% of GDP at the end of 2020. It stood at  41.9% of GDP at the end of 2021 and it is 
projected at 42.8% and 44% of GDP at the end of 2022 and 2023, respectively. Overall, the 
debt  sustainability  analysis 
term.25  The 
indicates  medium  risks  over 
implementation  of reforms  under the Next  Generation EU, notably the  RRF, is  expected to 
have a substantial positive and long-lasting impact on GDP growth in the coming years, which 
should contribute to strengthening debt sustainability. 

the  medium 

Other factors put forward by the Member State: The analysis presented in  the previous 
sections already covers the key factors put forward by Czechia on 11 May 2022. 

4.2.4.  GERMANY 

Medium-term macroeconomic position: After a contraction of 4.6% in 2020, the economy 
grew by 2.9% in 2021 and is expected to grow by 1.6% in 2022 and 2.4% in 2023. Growth in 
2022 is mainly driven by private consumption and investment. Economic activity is forecast to 
return to its annual 2019 level in 2023. 

Medium-term budgetary position, including investment: The government deficit decreased 
from 4.3% in 2020 to 3.7% of GDP in 2021. It is projected to be at 2.5% and 1% of GDP in 
2022 and 2023, respectively. After increasing to 2.6% of GDP in 2020, government investment 
decreased to 2.5% of GDP in 2021 and is projected to increase to 2.7% of GDP in 2022, with 
the latter being larger than the government deficit in 2022. Fiscal support – as measured by the 
cumulated annual change in the primary balance in 2020 and 2021 compared to 2019 plus the 
fiscal  impulse  provided  by  the  EU  funds  –  is  estimated  at  11.8%  of  GDP,  including 
discretionary budgetary measures and the operation of the automatic stabilisers. The measures 
taken by Germany in 2021 have been in line with the Council Recommendation of 20 July 
2020.  

In  2022,  based  on  the  Commission’s  2022  spring  forecast  and  including  the  information 
incorporated  in  Germany’s  2022  Stability  Programme,  the  fiscal  stance  is  projected  to  be 
supportive  at  -1.6%  of  GDP  as  recommended  by  the  Council.  Germany  plans  to  provide 
continued support to the recovery by making use of the RRF to finance additional investment 
as recommended by the Council. The positive contribution to economic activity of expenditure 
financed by RRF grants and other EU funds is projected to remain stable compared to 2021. 
Nationally  financed  investment  is  projected  to  provide  an  expansionary  contribution  to  the 

25  

SWD(2022) 605 final, Annex on Debt Sustainability Analysis. 

17 

 
 
 
                                                           
fiscal stance of 0.2 percentage points in 2022. Therefore, Germany plans to preserve nationally 
financed  investment,  as  recommended  by  the  Council.  At  the  same  time,  the  growth  in 
nationally  financed  primary  current  expenditure  (net  of  new  revenue  measures)  in  2022  is 
projected to provide an expansionary contribution of 1.5 percentage points to the overall fiscal 
stance.  This  significant  expansionary  contribution  includes  the  additional  impact  of  the 
measures to address the economic and social impact of the increase in energy prices (0.7% of 
GDP)  as  well  as  the  costs  to  offer  temporary  protection  to  displaced  persons  from  Ukraine 
(0.1%  of  GDP),  while  additional  spending  for  the  green  transition  (0.2%  of  GDP)  is  also 
projected to contribute to the growth in net current expenditure.  

Medium-term debt position: The government debt increased from 58.9% at the end of 2019 
to 68.7% of GDP at the end of 2020. It stood at  69.3% of GDP at the end of 2021 and it is 
projected at 66.4% and 64.5% of GDP at the end of 2022 and 2023, respectively. Overall, the 
debt sustainability analysis indicates low risks over the medium term.26 The implementation of 
reforms  under  the  Next  Generation  EU,  notably  the  RRF,  is  expected  to  have  a  substantial 
positive and long-lasting impact on GDP growth in the coming years, which should contribute 
to strengthening debt sustainability. 

Assessment  under  the  MIP:  Germany  is  experiencing  imbalances  in  the  sense  of  the 
Macroeconomic  Imbalance  Procedure.  Vulnerabilities  relate  to  a  persistent  large  current 
account surplus, which reflects subdued investment relative to savings, and has cross-border 
relevance.  Looking  forward,  the  Recovery  and  Resilience  Plan  provides  an  opportunity  to 
address imbalances, investment and reforms needs. 

Other factors put forward by the Member State: The analysis presented in  the previous 
sections already covers the key factors put forward by Germany on 9 May 2022. 

4.2.5.  ESTONIA 

Medium-term  macroeconomic  position:  After  a  contraction  of  3%  in  2020,  the  economy 
grew by 8.3% in 2021 and is expected to grow by 1% in 2022 and 2.4% in 2023. Growth in 
2022 is mainly driven by net exports and private consumption. Economic activity has exceeded 
its annual 2019 level in 2021. 

Medium-term budgetary position, including investment: The government deficit decreased 
from 5.6% in 2020 to 2.4% of GDP in 2021. It is projected to be at 4.4% and 3.7% of GDP in 
2022 and 2023, respectively. After increasing to 5.8% of GDP in 2020, government investment 
decreased to 5.7% of GDP in 2021 and is projected to increase to 6.3% of GDP in 2022, being 
larger  than  the  government  deficit  in  2021  and  2022.  Fiscal  support  –  as  measured  by  the 
cumulated annual change in the primary balance in 2020 and 2021 compared to 2019 plus the 
fiscal  impulse  provided  by  the  EU  funds  –  is  estimated  at  11.5%  of  GDP,  including 
discretionary budgetary measures and the operation of the automatic stabilisers. The measures 
taken by Estonia in 2021 have been in line with the Council Recommendation of 20 July 2020.  

In  2022,  based  on  the  Commission’s  2022  spring  forecast  and  including  the  information 
incorporated  in  Estonia’s  2022  Stability  Programme,  the  fiscal  stance  is  projected  to  be 
supportive,  at  -2.4%  of  GDP,  as  recommended  by  the  Council.  Estonia  plans  to  provide 
continued support to the recovery by making use of the RRF to finance additional investment 

26  

SWD(2022) 607 final, Annex on Debt Sustainability Analysis. 

18 

 
 
 
                                                           
as recommended by the Council. The positive contribution to economic activity of expenditure 
financed by RRF grants and other EU funds is projected to increase by 0.1 percentage point 
compared  to  2021.  Nationally  financed  investment  is  projected  to  provide  an  expansionary 
contribution to the fiscal stance of 0.6 percentage points in 2022. Therefore, Estonia plans to 
preserve nationally financed investment, as recommended by the Council. At the same time, 
the growth in nationally financed primary current expenditure (net of new revenue measures) 
in 2022 is projected to provide an expansionary contribution of 1.4 percentage points to the 
overall  fiscal  stance.  This  significant  expansionary  contribution  includes,  amongst  others, 
increases  in  wages  and  social  transfers  as  well  as  the  additional  impact  of  the  measures  to 
address the economic and social impact of the increase in energy prices (0.5% of GDP) and of 
the costs to offer temporary protection to displaced persons from Ukraine (0.4% of GDP).   

Medium-term debt position: The government debt increased from 8.6% at the end of 2019 to 
19% of GDP at the end of 2020. It stood at 18.1% of GDP at the end of 2021 and it is projected 
at  20.9%  and  23.5%  of  GDP  at  the  end  of  2022  and  2023,  respectively.  Overall,  the  debt 
sustainability  analysis  indicates  low  risks  over  the  medium  term.27  The  implementation  of 
reforms  under  the  Next  Generation  EU,  notably  the  RRF,  is  expected  to  have  a  substantial 
positive and long-lasting impact on GDP growth in the coming years, which should contribute 
to strengthening debt sustainability. 

Other factors put forward by the Member State: The analysis presented in  the previous 
sections already covers the key factors put forward by Estonia on 6 May 2022. 

4.2.6.  GREECE 

Medium-term  macroeconomic  position:  After  a  contraction  of  9%  in  2020,  the  economy 
grew by 8.3% in 2021 and is expected to grow by 3.5% in 2022 and 3.1% in 2023. Growth in 
2022 is mainly driven by investment and private consumption. Economic activity is forecast to 
return to its annual 2019 level in 2022. 

Medium-term budgetary position, including investment: The government deficit decreased 
from 10.2% in 2020 to 7.4% of GDP in 2021. It is projected to be at 4.3% and 1% of GDP in 
2022 and 2023, respectively. After increasing to 3.1% of GDP in 2020, government investment 
increased to 3.6% of GDP in 2021 and is projected to increase further to 4.8% of GDP in 2022, 
with the latter being larger than the government deficit in 2022. Fiscal support – as measured 
by the cumulated annual change in the primary balance in 2020 and 2021 compared to 2019 
plus the fiscal impulse provided by the EU funds – is estimated at 26.4% of GDP, including 
discretionary budgetary measures and the operation of the automatic stabilisers. The measures 
taken by Greece in 2021 have been in line with the Council Recommendation of 20 July 2020.  

In  2022,  based  on  the  Commission’s  2022  spring  forecast  and  including  the  information 
incorporated  in  Greece’s  2022  Stability  Programme,  the  fiscal  stance  is  projected  to  be 
supportive at –3.3% of GDP. Greece plans to provide continued support to the recovery by 
making use of the RRF to finance additional investment as recommended by the Council. The 
positive contribution to economic activity of expenditure financed by RRF grants and other EU 
funds is projected to increase by 0.2 percentage points of GDP compared to 2021. Nationally 
financed investment is projected to provide an expansionary contribution to the fiscal stance of 

27  

SWD(2022) 608 final, Annex on Debt Sustainability Analysis. 

19 

 
 
 
                                                           
0.8  percentage  points  in  2022.  Therefore,  Greece  plans  preserve  nationally  financed 
investment,  as  recommended  by  the  Council.  At  the  same  time,  the  growth  in  nationally 
financed primary current expenditure (net of new revenue measures) in 2022 is projected to 
provide an expansionary contribution of 2.2 percentage points to the overall fiscal stance. This 
significant expansionary contribution includes the additional impact of the measures to address 
the economic and social impact of the increase in energy prices (0.6 % of GDP) as well as the 
costs to offer temporary protection to displaced persons from Ukraine (0.1% of GDP), while 
the increased expenditure for pensions and social benefits is also projected to contribute (0.6% 
of GDP) to the growth in net current expenditure. Based on the Commission’s forecast, these 
measures are not fully matched by offsetting measures. 

Medium-term debt position: The government debt increased from 180.7% at the end of 2019 
to 206.3% of GDP at the end of 2020. It stood at 193.3% of GDP at the end of 2021 and it is 
projected at 185.7% and 180.4% of GDP at the end of 2022 and 2023, respectively. Greece is 
under enhanced surveillance.28 Overall, the debt sustainability analysis indicates high risks over 
the medium term.29 According to the baseline 10-year projection, the government debt ratio 
would decline over the period to around 131% of GDP in 2032. The debt trajectory is highly 
sensitive to macroeconomic shocks. According to the stochastic projections, which simulate a 
large range of possible temporary shocks to macroeconomic variables, it is probable that debt 
would not stabilise by 2026 and there is a high uncertainty surrounding the baseline. There are 
other factors relevant for an overall assessment of debt sustainability. On the one hand, risks-
mitigating factors include the large share of debt held by official lenders at low interest rates, 
the particularly long maturity structure of debt  compared  with  peer countries. The currency 
denomination of debt and historically low financing costs also contribute to mitigate risks. In 
addition, the implementation of reforms under the Next Generation EU, notably the RRF, is 
expected to have a positive and lasting impact on GDP growth, which should strengthen debt 
sustainability. On the other hand, risk-increasing factors relate to the state guarantees granted 
recently,  also  in  the  context  of  the  COVID-19  crisis.  Significant  contingent  liability  risks 
stemming  from  the  high  share  of  non-performing  loans  in  the  banking  sector  and  the  costs 
linked to pending legal cases against the state also pose fiscal risks. 

Assessment under the MIP: Greece is experiencing excessive imbalances in the sense of the 
Macroeconomic  Imbalance  Procedure.  Vulnerabilities  relate  to  high  government  debt, 
incomplete external rebalancing and high non-performing loans in a context of low potential 
growth and high unemployment. Looking forward, the Recovery and Resilience Plan provides 
an opportunity to address imbalances, investment and reforms needs.   

Other factors put forward by the Member State: The analysis presented in  the previous 
sections already covers the key factors put forward by Greece on 9 May 2022. 

28  

29  

Commission  Implementing  Decision  (EU)  2022/216  of  15  February  2022  on  the  prolongation  of 
enhanced surveillance for Greece (OJ L37, 18.2.2022, p. 34).  
SWD(2022) 609 final, Annex on Debt Sustainability Analysis. 

20 

 
 
 
                                                           
4.2.7.  SPAIN 

Medium-term macroeconomic position: After a contraction of 10.8% in 2020, the economy 
grew by 5.1% in 2021 and is expected to grow by 4% in 2022 and 3.4% in 2023. Growth in 
2022 is mainly driven by net exports and investment. Economic activity is forecast to return to 
its annual 2019 level in 2023. 

Medium-term budgetary position, including investment: The government deficit decreased 
from 10.3% in 2020 to 6.9% of GDP in 2021. It is projected to be at 4.9% and 4.4% of GDP in 
2022 and 2023, respectively. After increasing to 2.6% of GDP in 2020, government investment 
increased to 2.7% of GDP in 2021 and is projected to remain stable in 2022. Fiscal support – 
as  measured  by  the  cumulated  annual  change  in  the  primary  balance  in  2020  and  2021 
compared to 2019 plus the fiscal impulse provided by the EU funds – is estimated at 12.8% of 
GDP,  including  discretionary  budgetary  measures  and  the  operation  of  the  automatic 
stabilisers.  The  measures  taken  by  Spain  in  2021  have  been  in  line  with  the  Council 
Recommendation of 20 July 2020.  

In  2022,  based  on  the  Commission’s  2022  spring  forecast  and  including  the  information 
incorporated in its 2022 Stability Programme, the fiscal stance is projected to be supportive at 
-2.2% of GDP. Spain plans to provide continued support to the recovery by making use of the 
RRF  to  finance  additional  investment  as  recommended  by  the  Council.  The  positive 
contribution to economic activity of expenditure financed by RRF grants and other EU funds 
is projected to increase by 0.9 percentage points of GDP compared to 2021. Nationally financed 
investment  is  projected  to  provide  an  expansionary  contribution  to  the  fiscal  stance  of  0.4 
percentage points in 2022. Therefore, Spain plans to preserve nationally financed investment, 
as recommended by the Council. At the same time, the growth in nationally financed primary 
current  expenditure  (net  of  new  revenue  measures)  in  2022  is  projected  to  provide  an 
expansionary contribution of 1.2 percentage points to the overall fiscal stance. This significant 
expansionary  contribution  includes  the  additional  impact  of  the  measures  to  address  the 
economic and social impact of the increase in energy prices (0.3% of GDP) as well as the costs 
to  offer  temporary  protection  to  displaced  persons  from  Ukraine  (0.1%  of  GDP),  while  the 
higher  increase  in  consumer  prices  compared  to  the  GDP  deflator  is  projected  to  affect  the 
expansionary  contribution  of  nationally  financed  primary  current  expenditure  in  2022  by 
increasing  spending  on  government  consumption  of  goods  and  services.  Based  on  the 
Commission’s forecast, these measures are not fully matched by offsetting measures. 

Medium-term debt position: The government debt increased from 98.3% at the end of 2019 
to 120% of GDP at the end of 2020. It stood at 118.4% of GDP at the end of 2021 and it is 
projected at 115.1% and 113.7% of GDP at the end of 2022 and 2023, respectively. Overall, 
the debt sustainability analysis indicates high risks over the medium term.30 According to the 
baseline  10-year  projection,  the  general  government  debt  ratio  would  slightly  increase  to 
around  116%  of  GDP  in  2032.  The  debt  trajectory  is  sensitive  to  macroeconomic  shocks. 
According to the stochastic projections, which simulate a large range of possible temporary 
shocks to macroeconomic variables, it is probable that the debt ratio would be higher in 2026 
than in 2021. There are other factors relevant for an overall assessment of debt sustainability. 
On the one hand, risks-mitigating factors include the lengthening of debt maturity in recent 
years,  relatively  stable  financing  sources  (with  a  diversified  and  large  investor  base),  the 
currency  denomination  of  debt,  and  historically  low  borrowing  costs.  In  addition,  the 

30  

SWD(2022) 610 final, Annex on Debt Sustainability Analysis. 

21 

 
 
                                                           
implementation  of reforms  under the Next  Generation EU, notably the RRF, is  expected to 
have a positive and lasting impact on GDP growth, which should strengthen debt sustainability. 
On the other hand, risk-increasing factors relate to the share of short-term debt, state guarantees 
granted  to  firms  and  self-employed  during  the  COVID-19  crisis,  and  contingent  liabilities 
linked to the banking sector. Gross financing needs are projected to increase.   

Assessment  under  the  MIP:  Spain  is  experiencing  imbalances  in  the  sense  of  the 
Macroeconomic Imbalance Procedure. Vulnerabilities relate to high external, government and 
private debt, in a context of high unemployment, and have cross-border relevance.  Looking 
forward,  the  Recovery  and  Resilience  Plan  provides  an  opportunity  to  address  imbalances, 
investment and reforms needs. 

Other factors  put forward by the Member State: The analysis presented in  the previous 
sections already covers the key factors put forward by Spain on 9 May 2022. 

4.2.8.  FRANCE 

Medium-term macroeconomic position: After a contraction of 7.9% in 2020, the economy 
grew by 7% in 2021 and is expected to grow by 3.1% in 2022 and 1.8% in 2023. Growth in 
2022 is mainly driven by private consumption and investment. Economic activity is forecast to 
return to its annual 2019 level in 2022. 

Medium-term budgetary position, including investment: The government deficit decreased 
from 8.9% in 2020 to 6.5% of GDP in 2021. It is projected to be at 4.6% and 3.2% of GDP in 
2022 and 2023, respectively. After remaining at 3.7% of GDP in 2020, government investment 
decreased to 3.6% of GDP in 2021 and is projected to remain stable in 2022. Fiscal support – 
as  measured  by  the  cumulated  annual  change  in  the  primary  balance  in  2020  and  2021 
compared to 2019 plus the fiscal impulse provided by the EU funds – is estimated at 10.4% of 
GDP,  including  discretionary  budgetary  measures  and  the  operation  of  the  automatic 
stabilisers.  The  measures  taken  by  France  in  2021  have  been  in  line  with  the  Council 
Recommendation of 20 July 2020.   

In 2022, based on the Commission’s 2022 spring forecast, the fiscal stance is projected to be 
supportive  at  -1.7%  of  GDP.  France  plans  to  provide  continued  support  to  the  recovery  by 
making use of the RRF to finance additional investment as recommended by the Council. The 
positive contribution to economic activity of expenditure financed by RRF grants and other EU 
funds  is  projected  to  decrease  by  0.2  percentage  points  of  GDP  compared  to  2021.  This 
decrease in 2022 is due to the frontloaded financial support from the RRF in 2021. Nationally 
financed investment is projected to provide a neutral contribution to the fiscal stance in 2022. 
Therefore, France plans to preserve nationally financed investment, as recommended by the 
Council. At the same time, the growth in nationally financed primary current expenditure (net 
of new revenue measures) in 2022 is projected to provide an expansionary contribution of 1.6 
percentage  points  to  the  overall  fiscal  stance.  This  significant  expansionary  contribution 
includes the additional impact of the measures to address the economic and social impact of 
the increase in energy prices (0.5% of GDP) as well as the costs to offer temporary protection 
to displaced persons from Ukraine (0.1% of GDP). Other current expenditure measures include 
those put forward in the “Plan de résilience économique et sociale” to address the economic 
consequences of the conflict in Ukraine, such as direct subsidies to ad hoc sectors  (0.1% of 
GDP), and the increase of civil servant wages (0.1% of GDP). On the revenue side, the cut in 
the corporate income tax rate (0.1% of GDP) and of the housing taxes (0.1% of GDP) are also 

22 

 
 
 
projected  to  contribute  to  the  expansionary  fiscal  stance.  The  higher  increase  in  consumer 
prices compared to the GDP deflator is projected to affect the expansionary contribution of 
nationally financed primary current expenditure in 2022 by increasing public consumption and 
social  benefits.  Based  on  the  Commission’s  forecast,  these  measures  and  drivers  of  higher 
expenditure are not fully matched by offsetting measures. 

Medium-term debt position: The government debt increased from 97.4% at the end of 2019 
to 114.6% of GDP at the end of 2020. It stood at 112.9% of GDP at the end of 2021 and it is 
projected at 111.2% and 109.1% of GDP at the end of 2022 and 2023, respectively. Overall, 
the debt sustainability analysis indicates high risks over the medium term.31 According to the 
baseline 10-year projection, the general government debt ratio would broadly stabilise over the 
next  10  years, remaining at  a high level.  The debt  trajectory is  sensitive  to  macroeconomic 
shocks.  According  to  the  stochastic  projections,  which  simulate  a  large  range  of  possible 
temporary shocks to macroeconomic variables, it is probable that the debt ratio would be higher 
in  2026  than  in  2021.  There  are  other  factors  relevant  for  an  overall  assessment  of  debt 
sustainability.  On  the  one  hand,  risks-mitigating  factors  include  the  lengthening  of  debt 
maturity  in  recent  years,  relatively  stable  financing  sources  (with  a  diversified  and  large 
investor base), and historically low borrowing costs. In addition, the implementation of reforms 
under the Next Generation EU, notably the RRF, is expected to have a positive and lasting 
impact on GDP growth, which should strengthen debt sustainability. On the other hand, risk-
increasing factors relate to the share of short-term debt, the expected increase in gross financing 
needs over the medium term and the contingent liability risks stemming from the private sector, 
including  via  the  possible  materialisation  of  state  guarantees  granted  to  firms  and  self-
employed during the COVID-19 crisis. 

Assessment  under  the  MIP:  France  is  experiencing  imbalances  in  the  sense  of  the 
Macroeconomic  Imbalance  Procedure.  Vulnerabilities  relate  to  high  government  debt  and 
weak  competitiveness,  which  have  cross-border  relevance,  in  a  context  of  low  productivity 
growth. Looking forward, the Recovery and Resilience Plan provides an opportunity to address 
imbalances, investment and reforms needs. 

Other  factors  put  forward  by  the  Member  State:  On  9  May  2022,  France  provided 
additional relevant factors not  yet mentioned above, namely, the French government argues 
that,  from  2023  onwards,  the  recently  adopted  reforms  of  the  public  finances  governance 
framework,  including  the  introduction  of  a  multiannual  expenditure  rule  and  enhanced 
responsibilities of the French fiscal council, will allow the effective control of public spending 
and the progressive return to balanced public finances. 

4.2.9. 

ITALY 

Medium-term  macroeconomic  position:  After  a  contraction  of  9%  in  2020,  the  economy 
grew by 6.6% in 2021 and is expected to grow by 2.4% in 2022 and 1.9% in 2023. Growth in 
2022 is mainly driven by private consumption and investment. Economic activity is forecast to 
return to its annual 2019 level in 2023. 

Medium-term budgetary position, including investment: The government deficit decreased 
from 9.6% in 2020 to 7.2% of GDP in 2021. It is projected to be at 5.5% and 4.3% of GDP in 

31  

SWD(2022) 612 final, Annex on Debt Sustainability Analysis. 

23 

 
 
 
                                                           
2022 and 2023, respectively. After increasing to 2.6% of GDP in 2020, government investment 
increased to 2.9% of GDP in 2021 and is projected to increase further to 3.2% of GDP in 2022. 
Fiscal support – as measured by the cumulated annual change in the primary balance in 2020 
and 2021 compared to 2019 plus the fiscal impulse provided by the EU funds – is estimated at 
14.1% of GDP, including discretionary budgetary measures and the operation of the automatic 
stabilisers.  The  measures  taken  by  Italy  in  2021  have  been  in  line  with  the  Council 
Recommendation of 20 July 2020.  

In  2022,  based  on  the  Commission’s  2022  spring  forecast  and  including  the  information 
incorporated in Italy’s 2022 Stability Programme, the fiscal stance is projected to be supportive 
at - 2.7% of GDP. Italy plans to provide continued support to the recovery by making use of 
the  RRF  to  finance  additional  investment  as  recommended  by  the  Council.  The  positive 
contribution to economic activity of expenditure financed by RRF grants and other EU funds 
is projected to increase by 0.9% of GDP compared to 2021. Nationally financed investment is 
projected to provide an expansionary contribution to the fiscal stance of 0.3 percentage points 
in 2022. Therefore, Italy plans to preserve nationally financed investment, as recommended by 
the  Council.  The  growth  in  nationally  financed  primary  current  expenditure  (net  of  new 
revenue  measures)  in  2022  is  projected  to  provide  an  expansionary  contribution  of  1.3 
percentage  points  to  the  overall  fiscal  stance.  This  significant  expansionary  contribution 
includes the additional impact of the measures to address the economic and social impact of 
the increase in energy prices (0.2 % of GDP)32 as well as the costs to offer temporary protection 
to displaced persons from Ukraine (0.1 % of GDP). The growth in current expenditure also 
reflects  higher  expenditure  on  compensation  of  government  sector  employees,  due  to  the 
renewal of public contracts for the period 2019-2021, for which a substantial part (amounting 
to ¼% of GDP) will be recorded in 2022, while additional resources are also budgeted for the 
healthcare sector (0.1% of GDP). On the revenue side, the reduction of personal income taxes 
and the regional tax on productive activities (0.4% of GDP) are also projected to contribute to 
the expansionary fiscal stance. Therefore, on the basis of current Commission estimates, Italy 
does not sufficiently limit the growth of net nationally financed current expenditure in 2022. 

Medium-term debt position: The government debt increased from 134.1% at the end of 2019 
to 155.3% of GDP at the end of 2020. It stood at 150.8% of GDP at the end of 2021 and it is 
projected at 147.9% and 146.8% of GDP at the end of 2022 and 2023, respectively. Overall, 
the debt sustainability analysis indicates high risks over the medium term.33 According to the 
baseline 10-year projection, the general government debt ratio would stabilise over the next 
five years. However, as of 2027 the debt ratio would start to increase to around 155% of GDP 
in 2032. The debt trajectory is sensitive to macroeconomic shocks. According to the stochastic 
projections,  which  simulate  a  large  range  of  possible  temporary  shocks  to  macroeconomic 
variables, it is probable that the debt ratio would be higher in 2026 than in 2021. There are 
other factors relevant for an overall assessment of debt sustainability. On the one hand, risks-
mitigating factors include the lengthening of debt  maturity in recent  years, relatively stable 
financing sources (with a diversified and large investors’ base), and historically low borrowing 
costs. In addition, the implementation of reforms under the Next Generation EU, notably the 

32 

33  

In 2021, measures to address the economic and social impact of the increase in energy prices were already 
in place in Italy, amounting to 0.3% of GDP. These measures mainly consisted of reductions of  fixed 
levies  and  VAT  rates  on  electricity  and  natural  gas  bills  and  of  an  increase  of  the  social  bonus  for 
electricity and natural gas bills. 
SWD(2022) 616 final, Annex on Debt Sustainability Analysis. 

24 

 
 
                                                           
RRF,  is  expected  to  have  a  positive  and  lasting  impact  on  GDP  growth,  which  should 
strengthen debt sustainability. On the other hand, risk-increasing factors relate to the share of 
short-term debt, contingent liability risks stemming from the private sector, including via the 
possible  materialisation  of  state  guarantees  granted  to  firms  and  self-employed  during  the 
COVID-19 crisis. Gross financing needs are projected to increase over the medium term. 

Assessment under the MIP: Italy is experiencing excessive imbalances in the sense of the 
Macroeconomic Imbalance Procedure. Vulnerabilities relate to the high government debt and 
weak productivity growth, in a context of labour market fragilities and some weaknesses in 
financial  markets,  which  carry  cross-border  relevance.  Looking  forward,  the  Recovery  and 
Resilience Plan provides an opportunity to address imbalances, investment and reforms needs.  

Other factors put forward by the Member State: On 11 May 2022, Italy provided additional 
relevant  factors  not  yet  mentioned  above,  namely  the  authorities  highlighted  that  the 
countercyclical fiscal policy interventions have been effective in stabilizing the economy, also 
leading to lower-than-expected deficits in 2020-2021; that the substantial increase in general 
government  liabilities  has  been  effective  in  shielding  the  private  sector  balance  sheets;  the 
comparatively low stock of contingent liabilities even after the increase caused by the COVID-
19 crisis; the limited economic impact of the Recovery and Resilience Plan so far, which is 
however expected to become more favourable following the full deployment of the measures 
included in the Plan. 

4.2.10.  LATVIA 

Medium-term macroeconomic position: After a contraction of 3.8% in 2020, the economy 
grew by 4.5% in 2021 and is expected to grow by 2% in 2022 and 2.9% in 2023. Growth in 
2022 is mainly driven by private consumption and investment. Economic activity has exceeded 
its annual 2019 level in 2021. 

Medium-term budgetary position, including investment: The government deficit increased 
from 4.5% in 2020 to 7.3% of GDP in 2021. It is projected to be at 7.2% and 3% of GDP in 
2022 and 2023, respectively. After increasing to 5.7% of GDP in 2020, government investment 
decreased to 5.2% of GDP in 2021 and is projected to increase to 6.1% of GDP in 2022. Fiscal 
support – as measured by the cumulated annual  change in the primary balance in 2020 and 
2021 compared to  2019  plus  the fiscal  impulse provided by the EU  funds – is  estimated at 
13.9% of GDP, including discretionary budgetary measures and the operation of the automatic 
stabilisers.  The  measures  taken  by  Latvia  in  2021  have  been  in  line  with  the  Council 
Recommendation of 20 July 2020.  

In  2022,  based  on  the  Commission’s  2022  spring  forecast  and  including  the  information 
incorporated  in  Latvia’s  2022  Stability  Programme,  the  fiscal  stance  is  projected  to  be 
supportive  at  -3.3%  of  GDP,  as  recommended  by  the  Council.  Latvia  plans  to  provide 
continued support to the recovery by making use of the RRF to finance additional investment 
as recommended by the Council. The positive contribution to economic activity of expenditure 
financed by RRF grants and other EU funds is projected to increase by 0.8% of GDP compared 
to 2021. Nationally financed investment is projected to provide an expansionary contribution 
to  the  fiscal  stance  of  0.3  percentage  points  in  2022.  Therefore,  Latvia  plans  to  preserve 
nationally financed investment, as recommended by the Council. At the same time, the growth 
in nationally financed primary current expenditure (net of new revenue measures) in 2022 is 
projected to provide an expansionary contribution of 1.5 percentage points to the overall fiscal 

25 

 
 
 
stance.  This  significant  expansionary  contribution  includes  the  additional  impact  of  the 
measures to address the economic and social impact of the increase in energy prices (0.8 % of 
GDP) as well as the costs to offer temporary protection to displaced persons from Ukraine (0.3 
%  of  GDP).  Latvia  broadly  keeps  under  control  the  growth  of  nationally  financed  current 
expenditure in 2022, as the significant expansionary contribution of nationally financed current 
expenditure in 2022 is mainly due to the measures to address the economic and social impact 
of the increase in energy prices as well as the costs to offer temporary protection to displaced 
persons from Ukraine. 

Medium-term debt position: The government debt increased from 36.7% at the end of 2019 
to 43.3% of GDP at the end of 2020. It stood at  44.8% of GDP at the end of 2021 and it is 
projected at 47% and 46.5% of GDP at the end of 2022 and 2023, respectively. Overall, the 
debt sustainability analysis indicates low risks over the medium term.34 The implementation of 
reforms  under  the  Next  Generation  EU,  notably  the  RRF,  is  expected  to  have  a  substantial 
positive and long-lasting impact on GDP growth in the coming years, which should contribute 
to strengthening debt sustainability. 

Other factors put forward by the Member State: The analysis presented in  the previous 
sections already covers the key factors put forward by Latvia on 5 May 2022.  

4.2.11.  LITHUANIA 

Medium-term macroeconomic position: After a contraction of 0.1% in 2020, the economy 
grew by 5% in 2021 and is expected to grow by 1.7% in 2022 and 2.6% in 2023. Growth in 
2022 is mainly driven by private consumption and investment. Economic activity has exceeded 
its annual 2019 level in 2021. 

Medium-term budgetary position, including investment: The government deficit decreased 
from 7.3% in 2020 to 1% of GDP in 2021. It is projected to be at 4.6% and 2.3% of GDP in 
2022 and 2023, respectively. After increasing to 4.1% of GDP in 2020, government investment 
decreased to 3.2% of GDP in 2021 and is projected to increase to 3.7% of GDP in 2022, with 
the first being larger than the government deficit in 2021. Fiscal support – as measured by the 
cumulated annual change in the primary balance in 2020 and 2021 compared to 2019 plus the 
fiscal  impulse  provided  by  the  EU  funds  –  is  estimated  at  12.6%  of  GDP,  including 
discretionary budgetary measures and the operation of the automatic stabilisers. The measures 
taken by Lithuania in 2021 have been in line with the Council Recommendation of 20 July 
2020.  

In  2022,  based  on  the  Commission’s  2022  spring  forecast  and  including  the  information 
incorporated  in  Lithuania’s  2022  Stability  Programme,  the  fiscal  stance  is  projected  to  be 
supportive  at  -4.2%  of  GDP  as  recommended  by  the  Council.  Lithuania  plans  to  provide 
continued support to the recovery by making use of the RRF to finance additional investment 
as recommended by the Council. The positive contribution to economic activity of expenditure 
financed by RRF grants and other EU funds is projected to increase by 0.5 percentage points 
of  GDP  compared  to  2021.  Nationally  financed  investment  is  projected  to  provide  an 
expansionary  contribution  to  the  fiscal  stance  of  0.3  percentage  points  in  2022.  Therefore, 
Lithuania plans to preserve nationally financed investment, as recommended by the Council. 

34  

SWD(2022) 619 final, Annex on Debt Sustainability Analysis. 

26 

 
 
 
                                                           
At the same time, the growth in nationally financed primary current expenditure (net of new 
revenue  measures)  in  2022  is  projected  to  provide  an  expansionary  contribution  of  3.2 
percentage  points  to  the  overall  fiscal  stance.  This  significant  expansionary  contribution 
includes the additional impact of the measures to address the economic and social impact of 
the increase in energy prices (1.2% of GDP) as well as the costs to offer temporary protection 
to displaced persons from Ukraine (0.2% of GDP, while, among other measures, additional 
support  to  lower  income  households  (additional  increase  of  pensions,  child  benefits,  social 
assistance, minimum level of non-taxable income) is also projected to contribute 0.4 % of GDP 
to  the  growth  in  net  current  expenditure.  Therefore,  on  the  basis  of  current  Commission 
estimates, Lithuania does not sufficiently keep under control the growth of nationally financed 
current expenditure in 2022. 

Medium-term debt position: The government debt increased from 35.9% at the end of 2019 
to 46.6% of GDP at the end of 2020. It stood at  44.3% of GDP at the end of 2021 and it is 
projected at 42.7% and 43.1% of GDP at the end of 2022 and 2023, respectively. Overall, the 
debt sustainability analysis indicates low risks over the medium term.35 The implementation of 
reforms  under  the  Next  Generation  EU,  notably  the  RRF,  is  expected  to  have  a  substantial 
positive and long-lasting impact on GDP growth in the coming years, which should contribute 
to strengthening debt sustainability. 

Other factors put forward by the Member State: The analysis presented in  the previous 
sections already covers the key factors put forward by Lithuania on 5 May 2022. 

4.2.12.  HUNGARY 

Medium-term macroeconomic position: After a contraction of 4.5% in 2020, the economy 
grew by 7.1% in 2021 and is expected to grow by 3.6% in 2022 and 2.6% in 2023. Growth in 
2022 is mainly driven by private consumption and net exports. Economic activity has exceeded 
its annual 2019 level in 2021. 

Medium-term budgetary position, including investment: The government deficit decreased 
from 7.8% in 2020 to 6.8% of GDP in 2021. It is projected to be at 6% and 4.9% of GDP in 
2022 and 2023, respectively. After increasing to 6.4% of GDP in 2020, government investment 
decreased  to  5.8%  of  GDP  in  2021  and  is  projected  to  be  at  5.4%  of  GDP  in  2022.  Fiscal 
support – as measured by the cumulated annual  change in the primary balance in 2020 and 
2021 compared to  2019  plus  the fiscal  impulse provided by the EU  funds – is  estimated at 
15.1% of GDP, including discretionary budgetary measures and the operation of the automatic 
stabilisers.  The  measures  taken  by  Hungary  in  2021  have  been  in  line  with  the  Council 
Recommendation of 20 July 2020.  

In  2022,  based  on  the  Commission’s  2022  spring  forecast  and  including  the  information 
incorporated in Hungary’s 2022 Convergence Programme, the fiscal stance is projected to be 
broadly neutral at -0.1% of GDP, while the Council recommended a supportive fiscal stance. 
Hungary  plans  to  provide  continued  support  to  the  recovery  by  making  use  of  the  RRF  to 
finance additional investment as recommended by the Council. The positive contribution  to 
economic activity of expenditure financed by RRF grants and other EU funds is projected to 
decrease by 1.0 percentage point of GDP compared to 2021 due to expected slowdown in the 

35  

SWD(2022) 617 final, Annex on Debt Sustainability Analysis. 

27 

 
 
 
                                                           
EU funds absorption.36 Nationally financed investment is projected to provide an expansionary 
contribution to the fiscal stance of 0.2 percentage points in 2022. Therefore, Hungary plans to 
preserve nationally financed investment, as recommended by the Council. At the same time, 
the growth in nationally financed primary current expenditure (net of new revenue measures) 
in 2022 is projected to provide an expansionary contribution of 0.4 percentage points to the 
overall  fiscal  stance.  This  includes  the  additional  impact  of  the  measures  to  address  the 
economic and social impact of the increase in energy prices (0.1% of GDP) as well as the costs 
to  offer  temporary  protection  to  displaced  persons  from  Ukraine  (0.2%  of  GDP).  Several 
discretionary  measures  also  contribute  to  the  growth  in  nationally  financed  primary  current 
expenditure  (net  of  new  revenue  measures),  such  as  the  reintroduction  of  the  13th  monthly 
pension, wage benefits for law enforcement and military officers, a reduction of employers’ 
social security contributions and training levy.  

Medium-term debt position: The government debt increased from 65.5% at the end of 2019 
to 79.6% of GDP at the end of 2020. It stood at  76.8% of GDP at the end of 2021 and it is 
projected at 76.4% and 76.1% of GDP at the end of 2022 and 2023, respectively. Overall, the 
debt  sustainability  analysis 
term.37  The 
indicates  medium  risks  over 
implementation  of reforms  under the Next  Generation EU, notably the  RRF, is  expected to 
have a substantial positive and long-lasting impact on GDP growth in the coming years, which 
should contribute to strengthening debt sustainability. 

the  medium 

Other factors  put forward by the Member State: The analysis presented in  the previous 
sections already covers the key factors put forward by Hungary on 9 May 2022. 

4.2.13.  MALTA 

Medium-term macroeconomic position: After a contraction of 8.3% in 2020, the economy 
grew by 9.4% in 2021 and is expected to grow by 4.2% in 2022 and 4% in 2023. Growth in 
2022 is mainly driven by public and private consumption. Economic activity has exceeded its 
annual 2019 level in 2021. 

Medium-term budgetary position, including investment: The government deficit decreased 
from 9.5% in 2020 to 8% of GDP in 2021. It is projected to be at 5.6% and 4.6% of GDP in 
2022 and 2023, respectively. After increasing to 4.5% of GDP in 2020, government investment 
decreased  to  4.2%  of  GDP  in  2021  and  is  projected  to  be  at  4.1%  of  GDP  in  2022.  Fiscal 
support – as measured by the cumulated annual  change in the primary balance in 2020 and 
2021 compared to  2019  plus  the fiscal  impulse provided by the EU  funds – is  estimated at 
21.8% of GDP, including discretionary budgetary measures and the operation of the automatic 
stabilisers.  The  measures  taken  by  Malta  in  2021  have  been  in  line  with  the  Council 
Recommendation of 20 July 2020.  

In  2022,  based  on  the  Commission’s  2022  spring  forecast  and  including  the  information 
incorporated  in  Malta’s  2022  Stability  Programme,  the  fiscal  stance  is  projected  to  be 
supportive at -1.5% of GDP as recommended by the Council. Malta plans to provide continued 
support  to  the  recovery  by  making  use  of  the  RRF  to  finance  additional  investment  as 
recommended by the Council. The positive contribution to economic activity of expenditure 

36 

37  

These are Commission projections. The Commission has not yet assessed the Recovery and Resilience 
Plan for Hungary. 
SWD(2022) 614 final, Annex on Debt Sustainability Analysis. 

28 

 
 
 
                                                           
financed by RRF grants and other EU funds is projected to increase by 0.2 percentage points 
of  GDP  compared  to  2021.  Nationally  financed  investment  is  projected  to  provide  a 
contractionary contribution  to  the fiscal  stance of 0.3 percentage points in 2022. Therefore, 
Malta does not plan to preserve nationally financed investment. At the same time, the growth 
in nationally financed primary current expenditure (net of new revenue measures) in 2022 is 
projected to provide an expansionary contribution of 1.6 percentage points to the overall fiscal 
stance.  This  significant  expansionary  contribution  includes  the  additional  impact  of  the 
measures to address the economic and social impact of the increase in energy prices (0.5 % of 
GDP), as well as the costs to offer temporary protection to displaced persons from Ukraine (0.1 
% of GDP). Moreover, the government granted financial support to households (0.3% of GDP), 
increased contributory and non-contributory pension  benefits  in  excess  of the cost  of living 
adjustment  (0.2%  of  GDP),  while  the  growth  rate  of  the  intermediate  consumption  (net  of 
measures) remained strong (0.4% of GDP).     

Medium-term debt position: The government debt increased from 40.7% at the end of 2019 
to  53.4%  of  GDP  at  the  end  of  2020.  It  stood  at  57%  of  GDP  at  the  end  of  2021  and  it  is 
projected at 58.5% and 59.5% of GDP at the end of 2022 and 2023, respectively. Overall, the 
debt  sustainability  analysis 
term.38  The 
indicates  medium  risks  over 
implementation  of reforms  under the Next  Generation EU, notably the  RRF, is  expected to 
have a substantial positive and long-lasting impact on GDP growth in the coming years, which 
should contribute to strengthening debt sustainability. 

the  medium 

Other factors put forward by the Member State: The analysis presented in  the previous 
sections already covers the key factors put forward by Malta on 9 May 2022. 

4.2.14.  AUSTRIA 

Medium-term macroeconomic position: After a contraction of 6.7% in 2020, the economy 
grew by 4.5% in 2021 and is expected to grow by 3.9% in 2022 and 1.9% in 2023. Growth in 
2022 is mainly driven by private consumption and net exports. Economic activity is forecast to 
return to its annual 2019 level in 2022. 

Medium-term budgetary position, including investment: The government deficit decreased 
from 8% in 2020 to 5.9% of GDP in 2021. It is projected to be at 3.1% and 1.5% of GDP in 
2022 and 2023, respectively. After increasing to 3.3% of GDP in 2020, government investment 
increased to 3.5% of GDP in 2021 and is projected to increase further to 3.7% of GDP in 2022, 
with the latter being larger than the government deficit in 2022. Fiscal support – as measured 
by the cumulated annual change in the primary balance in 2020 and 2021 compared to 2019 
plus the fiscal impulse provided by the EU funds – is estimated at 15.9% of GDP, including 
discretionary budgetary measures and the operation of the automatic stabilisers. The measures 
taken by Austria in 2021 have been in line with the Council Recommendation of 20 July 2020.  

In  2022,  based  on  the  Commission’s  2022  spring  forecast  and  including  the  information 
incorporated  in  Austria’s  2022  Stability  Programme,  the  fiscal  stance  is  projected  to  be 
supportive  at  -1.2%  of  GDP  as  recommended  by  the  Council.  Austria  plans  to  provide 
continued support to the recovery by making use of the RRF to finance additional investment 
as recommended by the Council. The positive contribution to economic activity of expenditure 

38  

SWD(2022) 620 final, Annex on Debt Sustainability Analysis. 

29 

 
 
 
                                                           
financed by RRF grants and other EU funds is projected to increase by 0.1 percentage point of 
GDP  in  2022  compared  to  2021.  Nationally  financed  investment  is  projected  to  provide  an 
expansionary  contribution  to  the  fiscal  stance  of  0.3  percentage  points  in  2022.  Therefore, 
Austria plans to preserve nationally financed investment, as recommended by the Council. At 
the  same  time,  the  growth  in  nationally  financed  primary  current  expenditure  (net  of  new 
revenue  measures)  in  2022  is  projected  to  provide  an  expansionary  contribution  of  0.5 
percentage  points  to  the  overall  fiscal  stance.  This  includes  the  additional  impact  of  the 
measures to address the economic and social impact of the increase in energy prices (0.4% of 
GDP)  as  well  as  the  costs  to  offer  temporary  protection  to  displaced  persons  from  Ukraine 
(0.3% of GDP).    

Medium-term debt position: The government debt increased from 70.6% at the end of 2019 
to 83.3% of GDP at the end of 2020. It stood at  82.8% of GDP at the end of 2021 and it is 
projected at 80% and 77.5% of GDP at the end of 2022 and 2023, respectively. Overall, the 
debt  sustainability  analysis 
term.39  The 
indicates  medium  risks  over 
implementation  of reforms  under the Next  Generation EU, notably the RRF, is  expected  to 
have a substantial positive and long-lasting impact on GDP growth in the coming years, which 
should contribute to strengthening debt sustainability. 

the  medium 

Other factors put forward by the Member State: The analysis presented in  the previous 
sections already covers the key factors put forward by Austria on 3 May 2022.  

4.2.15.  POLAND 

Medium-term macroeconomic position: After a contraction of 2.2% in 2020, the economy 
grew by 5.9% in 2021 and is expected to grow by 3.7% in 2022 and 3% in 2023. Growth in 
2022 is mainly driven by private consumption and investment. Economic activity has exceeded 
its annual 2019 level in 2021. 

Medium-term budgetary position, including investment: The government deficit decreased 
from 6.9% in 2020 to 1.9% of GDP in 2021. It is projected to be at 4.0% and 4.4% of GDP in 
2022 and 2023, respectively. After increasing to 4.5% of GDP in 2020, government investment 
decreased to 4.1% of GDP in 2021 and is projected to increase to 4.2% of GDP in 2022, being 
larger  than  the  government  deficit  in  2021  and  2022.  Fiscal  support  –  as  measured  by  the 
cumulated annual change in the primary balance in 2020 and 2021 compared to 2019 plus the 
fiscal  impulse  provided  by  the  EU  funds  –  is  estimated  at  10.5%  of  GDP,  including 
discretionary budgetary measures and the operation of the automatic stabilisers. The measures 
taken by Poland in 2021 have been in line with the Council Recommendation of 20 July 2020.  

In  2022,  based  on  the  Commission’s  2022  spring  forecast  and  including  the  information 
incorporated in Poland’s 2022 Convergence Programme, the fiscal stance is projected to be 
supportive at -3.4% of GDP, as recommended by the Council. Poland plans to provide support 
to the recovery by making use of the RRF to finance additional investment as recommended 
by the Council. The positive contribution to economic activity of expenditure financed by RRF 
grants and other EU funds is projected to increase by 0.1 percentage points of GDP compared 
to 2021.40 Nationally financed investment is projected to provide an expansionary contribution 

39  
40 

SWD(2022) 601 final, Annex on Debt Sustainability Analysis. 
These are Commission projections. The Commission has not yet assessed the Recovery and Resilience 
Plan for Poland. 

30 

 
 
 
                                                           
to  the  fiscal  stance  of  0.3  percentage  points  in  2022.  Therefore,  Poland  plans  to  preserve 
nationally financed investment, as recommended by the Council. At the same time, the growth 
in nationally financed primary current expenditure (net of new revenue measures) in 2022 is 
projected to provide an expansionary contribution of 2.7 percentage points to the overall fiscal 
stance.  This  significant  expansionary  contribution  includes  the  additional  impact  of  the 
measures to address the economic and social impact of the increase in energy prices (1.0% of 
GDP)  as  well  as  the  costs  to  offer  temporary  protection  to  displaced  persons  from  Ukraine 
(0.6% of GDP), while a new care allowance for young children (the Family Care Capital) is 
also projected to contribute (0.1% of GDP) to the growth in net current expenditure. On the 
revenue side, the cut in the personal income tax rate under the Polish Deal (0.7% of GDP) and 
the decrease of the corporate income tax rates (0.1% of GDP) are also projected to contribute 
to the expansionary fiscal stance. The higher increase in consumer prices compared to the GDP 
deflator  is  projected  to  affect  the  expansionary  contribution  of  nationally  financed  primary 
current expenditure in 2022, by increasing spending on government consumption of goods and 
services. 

Medium-term debt position: The government debt increased from 45.6% at the end of 2019 
to 57.1% of GDP at the end of 2020. It stood at 53.8% of GDP at the end of 2021 and it is 
projected at 50.8% and 49.8% of GDP at the end of 2022 and 2023, respectively. Overall, the 
term.41  The 
indicates  medium  risks  over 
debt  sustainability  analysis 
implementation  of reforms  under the Next  Generation EU, notably the  RRF, is  expected to 
have a substantial positive and long-lasting impact on GDP growth in the coming years, which 
should contribute to strengthening debt sustainability. 

the  medium 

Other  factors  put  forward  by  the  Member  State:  On  9  May  2022,  Poland  provided 
additional relevant factors not yet mentioned above, namely that the government deficit in 2023 
is forecast at 3.7% of GDP, despite a planned increase in military spending (which is partially 
recorded as public investments), in line with the Act of 11 March 2022 on Homeland’s defence, 
to 3.0% of GDP from 2.2% of GDP in 2022. 

4.2.16.  SLOVENIA 

Medium-term macroeconomic position: After a contraction of 4.2% in 2020, the economy 
grew by 8.1% in 2021 and is expected to grow by 3.7% in 2022 and 3.1% in 2023. Growth in 
2022 is mainly driven by private consumption and investment. Economic activity has exceeded 
its annual 2019 level in 2021. 

Medium-term budgetary position, including investment: The government deficit decreased 
from 7.8% in 2020 to 5.2% of GDP in 2021. It is projected to be at 4.3% and 3.4% of GDP in 
2022 and 2023, respectively. After increasing to 4.1% of GDP in 2020, government investment 
increased to 4.7% of GDP in 2021 and is projected to increase further to 5.7% of GDP in 2022, 
with the latter being larger than the government deficit in 2022. Fiscal support – as measured 
by the cumulated annual change in the primary balance in 2020 and 2021 compared to 2019 
plus the fiscal impulse provided by the EU funds – is estimated at 15.8% of GDP, including 
discretionary budgetary measures and the operation of the automatic stabilisers. The measures 
taken by Slovenia in 2021 have been in line with the Council Recommendation of 20 July 2020.  

41  

SWD(2022) 622 final, Annex on Debt Sustainability Analysis. 

31 

 
 
 
                                                           
In  2022,  based  on  the  Commission’s  2022  spring  forecast  and  including  the  information 
incorporated in its 2022 Stability Programme, the fiscal stance is projected to be supportive at 
-2.6% of GDP. Slovenia plans to provide continued support to the recovery by making use of 
the  RRF  to  finance  additional  investment  as  recommended  by  the  Council.  The  positive 
contribution to economic activity of expenditure financed by RRF grants and other EU funds 
is projected to increase by 0.2 percentage points of GDP compared to 2021. Nationally financed 
investment  is  projected  to  provide  an  expansionary  contribution  to  the  fiscal  stance  of  0.9 
percentage  points  in  2022.  Therefore,  Slovenia  plans  to  preserve  nationally  financed 
investment,  as  recommended  by  the  Council.  At  the  same  time,  the  growth  in  nationally 
financed primary current expenditure (net of new revenue measures) in 2022 is projected to 
provide an expansionary contribution of 1.6 percentage points to the overall fiscal stance. This 
significant expansionary contribution includes the additional impact of the measures to address 
the economic and social impact of the increase in energy prices (0.4% of GDP) as well as the 
costs to  offer temporary  protection to  displaced persons from  Ukraine  (0.1% of GDP). The 
higher  increase  in  consumer  prices  compared  to  the  GDP  deflator  is  projected  to  affect  the 
expansionary  contribution  of  nationally  financed  primary  current  expenditure  in  2022,  by 
increasing spending on government consumption of goods and services, as well as on social 
benefits as a result of indexation and on public wages as a result of increasing wage pressure. 

Medium-term debt position: The government debt increased from 65.6% at the end of 2019 
to 79.8% of GDP at the end of 2020. It stood at  74.7% of GDP at the end of 2021 and it is 
projected at 74.1% and 72.7% of GDP at the end of 2022 and 2023, respectively. Overall, the 
debt  sustainability  analysis  indicates  high  risks  over  the  medium  term.42  According  to  the 
baseline 10-year projection, the general government debt ratio would stabilise over the next 
five years. However, as of 2027 the debt ratio would start to increase to around 83% of GDP 
in 2032. The debt trajectory is sensitive to macroeconomic shocks. According to the stochastic 
projections,  which  simulate  a  large  range  of  possible  temporary  shocks  to  macroeconomic 
variables, it is probable that the debt ratio would be higher in 2026 than in 2021. In addition, a 
fiscal consolidation effort of 4½ percentage points of GDP would be needed to reduce debt to 
60% of GDP in 15 years’ time. There are other factors relevant for an overall assessment of 
debt sustainability. On the one hand, risks-mitigating factors include the lengthening of debt 
maturity in recent years, relatively stable financing sources, the currency denomination of debt, 
and historically low borrowing costs. In addition, the implementation of reforms under the Next 
Generation EU, notably the RRF, is expected to have a positive and lasting impact on GDP 
growth, which should strengthen debt sustainability. On the other hand, risk-increasing factors 
relate to the share of debt held by non-residents, higher additional long-term care expenditure 
resulting from a newly adopted long-term care act, and contingent liability risks stemming from 
the private sector, including via the possible materialisation of sizeable state guarantees granted 
to firms and self-employed during the COVID-19 crisis. 

Other factors put forward by the Member State: The analysis presented in  the previous 
sections already covers the key factors put forward by Slovenia on 9 May 2022. 

42  

SWD(2022) 626 final, Annex on Debt Sustainability Analysis. 

32 

 
 
 
                                                           
4.2.17.  SLOVAKIA 

Medium-term macroeconomic position: After a contraction of 4.4% in 2020, the economy 
grew by 3% in 2021 and is expected to grow by 2.3% in 2022 and 3.6% in 2023. Growth in 
2022 is mainly driven by investment and private consumption. Economic activity is forecast to 
return to its annual 2019 level in 2022. 

Medium-term budgetary position, including investment: The government deficit increased 
from 5.5% in 2020 to 6.2% of GDP in 2021. It is projected to be at 3.6% and 2.6% of GDP in 
2022 and 2023, respectively. After decreasing to 3.5% of GDP in 2020, government investment 
decreased to 3.2% of GDP in 2021 and is projected to increase to 4.2% of GDP in 2022, with 
the latter being larger than the government deficit in 2022. Fiscal support – as measured by the 
cumulated annual change in the primary balance in 2020 and 2021 compared to 2019 plus the 
fiscal  impulse  provided  by  the  EU  funds  –  is  estimated  at  11.9%  of  GDP,  including 
discretionary budgetary measures and the operation of the automatic stabilisers. The measures 
taken by Slovakia in 2021 have been in line with the Council Recommendation of 20 July 2020.  

In  2022,  based  on  the  Commission’s  2022  spring  forecast  and  including  the  information 
incorporated  in  Slovakia’s  2022  Stability  Programme,  the  fiscal  stance  is  projected  to  be 
contractionary at +0.3% of GDP, while the Council recommended a supportive fiscal stance. 
Slovakia  plans  to  provide  continued  support  to  the  recovery  by  making  use  of  the  RRF  to 
finance additional investment as recommended by the Council.  The positive contribution to 
economic activity of expenditure financed by RRF grants and other EU funds is projected to 
increase by 0.7 percentage points of GDP compared to 2021. Nationally financed investment 
is projected to provide an expansionary contribution to the fiscal stance of 0.4 percentage points 
in  2022.  Therefore,  Slovakia  plans  to  preserve  nationally  financed  investment,  as 
recommended by the Council. At the same time, the growth  in  nationally  financed primary 
current  expenditure  (net  of  new  revenue  measures)  in  2022  is  projected  to  provide  a 
contractionary contribution of 1.6 percentage points to the overall fiscal stance. This includes 
the  additional  impact  of  the  costs  to  offer  temporary  protection  to  displaced  persons  from 
Ukraine  (0.1  %  of  GDP).  Due  to  a  lagged  indexation  with  inflation,  major  government 
expenditures  like  social  benefits  other  than  in  kind  or  compensation  of  employees  have  a 
growth rate lower than inflation in 2022 and contribute to the contractionary stance. 

Medium-term debt position: The government debt increased from 48.1% at the end of 2019 
to 59.7% of GDP at the end of 2020. It stood at  63.1% of GDP at the end of 2021 and it is 
projected at 61.7% and 58.3% of GDP at the end of 2022 and 2023, respectively. Overall, the 
debt  sustainability  analysis  indicates  high  risks  over  the  medium  term.43  According  to  the 
baseline 10-year projection, the general government debt ratio would decrease over the next 
five years to 54% in 2026. However, as of 2027 the debt ratio would start to increase to around 
61% of GDP in 2032. According to the stochastic projections, which simulate a large range of 
possible  temporary  shocks  to  macroeconomic  variables,  there  is  a  significant  uncertainty 
surrounding the projections. There are other factors relevant for an overall assessment of debt 
sustainability.  On  the  one  hand,  risks-mitigating  factors  include  the  lengthening  of  debt 
maturity in recent  years, the currency denomination of debt, the limited share of short-term 
public debt, and historically low borrowing costs. In addition, the implementation of reforms 
under the Next Generation EU, notably the RRF, is expected to have a positive and lasting 
impact on GDP growth, which should strengthen debt sustainability. On the other hand, risk-

43  

SWD(2022) 627 final, Annex on Debt Sustainability Analysis. 

33 

 
 
                                                           
increasing  factors  relate  to  the  high  share  of  debt  held  by  non-residents,  the  negative  net 
international  investment  position,  and  contingent  liability  risks  stemming  from  the  private 
sector, including via the possible materialisation of sizeable state guarantees granted to firms 
and self-employed during the COVID-19 crisis. 

Other  factors  put  forward  by  the  Member  State:  On  6  May  2022,  Slovakia  provided 
additional  relevant  factors  not  yet  mentioned  above,  namely  regarding  the  impact  of  an 
increased levy to the EU budget as a result of irregularities in custom clearance (0.5% of GDP). 
Slovakia also mentions, besides the prevailing primary deficit, an additional accumulation of 
financial assets (2.2% of GDP), with the total estimated at 12% of GDP, well above historical 
values. 

4.2.18.  FINLAND 

Medium-term macroeconomic position: After a contraction of 2.3% in 2020, the economy 
grew by 3.5% in 2021 and is expected to grow by 1.6% in 2022 and 1.7% in 2023. Growth in 
2022 is mainly driven by private consumption and investment. Economic activity has exceeded 
its annual 2019 level in 2021. 

Medium-term budgetary position, including investment: The government deficit decreased 
from 5.5% in 2020 to 2.6% of GDP in 2021. It is projected to be at 2.2% and 1.7% of GDP in 
2022 and 2023, respectively. After increasing to 4.9% of GDP in 2020, government investment 
decreased to 4.1% of GDP in 2021 and is projected to increase to 4.4% of GDP in 2022, being 
larger  than  the  government  deficit  in  2021  and  2022.  Fiscal  support  –  as  measured  by  the 
cumulated annual change in the primary balance in 2020 and 2021 compared to 2019 plus the 
fiscal impulse provided by the EU funds – is estimated at 7.1% of GDP, including discretionary 
budgetary  measures  and  the  operation  of  the  automatic  stabilisers.  The  measures  taken  by 
Finland in 2021 have been in line with the Council Recommendation of 20 July 2020.  

In  2022,  based  on  the  Commission’s  2022  spring  forecast  and  including  the  information 
incorporated  in  Finland’s  2022  Stability  Programme,  the  fiscal  stance  is  projected  to  be 
supportive at -0.6% of GDP. Finland plans to provide continued support to the recovery by 
making use of the RRF to finance additional investment as recommended by the Council. The 
positive contribution to economic activity of expenditure financed by RRF grants and other EU 
funds is projected to increase by 0.2 percentage points of GDP compared to 2021. Nationally 
financed investment is projected to provide an expansionary contribution to the fiscal stance of 
0.2  percentage  points  in  2022.  Therefore,  Finland  plans  to  preserve  nationally  financed 
investment,  as  recommended  by  the  Council.  At  the  same  time,  the  growth  in  nationally 
financed primary current expenditure (net of new revenue measures) in 2022 is projected to 
provide a broadly neutral contribution of 0.1 percentage points to the overall fiscal stance. This 
includes the additional impact of the measures to address the economic and social impact of 
the increase in energy prices (0.1% of GDP) as well as the costs to offer temporary protection 
to displaced persons from Ukraine (0.1% of GDP).  

Medium-term debt position: The government debt increased from 59.6% at the end of 2019 
to  69%  of  GDP  at  the  end  of  2020.  It  stood  at  65.8%  of  GDP  at  the  end  of  2021  and  it  is 
projected at 65.9% and 66.6% of GDP at the end of 2022 and 2023, respectively. Overall, the 

34 

 
 
 
term.44  The 
indicates  medium  risks  over 
debt  sustainability  analysis 
implementation  of reforms  under the Next  Generation EU, notably the  RRF, is  expected to 
have a substantial positive and long-lasting impact on GDP growth in the coming years, which 
should contribute to strengthening debt sustainability. 

the  medium 

Other  factors  put  forward  by  the  Member  State:  On  6  May  2022,  Finland  provided 
additional  relevant  factors  not  yet  mentioned  above,  namely  regarding  a  strong  net  asset 
position. 

5. 

CONCLUSIONS 

For all the 17 Member States exceeding the deficit Treaty reference value in 2021 or planning 
to exceed it in 2022 (i.e. all the Member States considered in this report but Finland), the deficit 
was above and not close to the 3% of GDP. The excess over the Treaty reference value States 
is  considered  to  be  exceptional  as  defined  by  the  Treaty.  However,  for  Belgium,  Czechia, 
Estonia,  Spain,  France,  Italy,  Hungary,  Malta,  Poland  and  Slovenia,  the  excess  over  the 
reference value is not expected to be temporary.  
Overall, taking into account all relevant factors as appropriate45, the analysis suggests that the 
deficit criterion as defined in the Treaty and in Regulation (EC) No 1467/1997 is not fulfilled 
by Belgium, Bulgaria, Czechia, Germany, Estonia, Greece, Spain, France, Italy, Latvia, 
Lithuania, Hungary, Malta, Austria, Poland, Slovenia and Slovakia. 

From the Member States exceeding the 60% of GDP debt reference value at end-2021, the debt 
reduction benchmark was not respected by Belgium, France, Italy, Hungary and Finland. For 
Slovakia, the debt ratio is expected to decrease to below 60% of GDP in 2023.  

Overall, taking into account all relevant factors, the analysis suggests that the debt criterion as 
defined in the Treaty and in Regulation (EC) No 1467/1997 is fulfilled by Slovakia. The debt 
criterion is not fulfilled by Belgium, France, Italy, Hungary and Finland.  

Nevertheless,  the  Commission  considers,  within  its  assessment  of  all  relevant  factors,  that 
compliance with the debt reduction benchmark would imply a too demanding frontloaded fiscal 
effort that risks to jeopardise growth. Therefore, in the view of the Commission, compliance 
with  the  debt  reduction  benchmark  is  not  warranted  under  the  current  exceptional 
economic conditions. 

The COVID-19 pandemic continues to have an extraordinary macroeconomic and fiscal impact 
that, together with the invasion of Ukraine by Russia, creates exceptional uncertainty, including 
for designing a detailed path for fiscal policy. On these grounds, the Commission does not 
propose to open new excessive deficit procedures at this stage. The monitoring of debt and 
deficit  developments  will  continue  and  the  Commission  will  re-assess  the  relevance  of 
proposing to open excessive deficit procedures in autumn 2022. 

44  
45  

SWD(2022) 611 final, Annex on Debt Sustainability Analysis. 
Section 4 explains the conditions needed for the relevant factors to be taken into account in the steps 
leading to the decision on the existence of an excessive deficit on the basis of the deficit criterion. The 
relevant factors shall always be taken into account when assessing compliance on the basis of the debt 
criterion. 

35