COMMISSION STAFF WORKING DOCUMENT Accompanying the document Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL amending Regulations (EU) No 1173/2011 and (EU) No 473/2013 as regards alignment with the EU economic governance framework and further simplification of that framework Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL amending Regulation (EU) No 472/2013 as regards the economic and budgetary surveillance of Member States in the euro area experiencing or threatened with serious difficulties with respect to their financial stability Proposal for a COUNCIL REGULATION amending Council Regulation (EC) No 332/2002 as regards funding arrangements and the use of a diversified funding strategy
Date: 2025-10-02
Institutions: Directorate-General for Economic and Financial Affairs, European Commission
Subjects: balance of payments assistance, balance-of-payments deficit, budget deficit, capital movement, economic governance (EU), economic planning, euro area, fiscal policy, public debt, stability pact, structural adjustment

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  EN 

   EUROPEAN COMMISSION  Brussels, 2.10.2025  SWD(2025) 286 final  COMMISSION STAFF WORKING DOCUMENT Accompanying the document Proposal for a   REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL amending Regulations (EU) No 1173/2011 and (EU) No 473/2013 as regards alignment with the EU economic governance framework and further simplification of that framework                Proposal for a       REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL     amending Regulation (EU) No 472/2013 as regards the economic and budgetary surveillance of Member States in the euro area experiencing or threatened with serious difficulties with respect to their financial stability               Proposal for a        COUNCIL REGULATION      amending Council Regulation (EC) No 332/2002 as regards funding arrangements and the use of a diversified funding strategy {COM(2025) 591 final} - {COM(2025) 593 final} - {COM(2025) 595 final}  
 
 
1.  Introduction 

This staff working document sets out the main changes being proposed by the Commission 
as part of a simplification package aimed at aligning remaining elements of legislation with 
the core reform of the EU economic governance framework, in place since April 2024. The 
2024  reform  was  implemented  with  the  adoption  of  Regulation  (EU)  No  2024/12631,  which 
repealed  and  replaced  Regulation  (EU)  No  1466/97,  and  the  revisions  of  Regulation  (EC)  No 
1467/972 and Directive 2011/85 on national budgetary frameworks3. To achieve this alignment, 
the Commission is proposing amendments to Regulation (EU) No 1173/20114, Regulation (EU) 
No 473/20135 and Regulation (EU) No 472/20136. 

The  Union  economic  governance  framework  was  subject  to  a  broad  reform  in  2024.  The 
reformed  framework  aimed  at  promoting  healthy  and  sustainable  public  finances,  supporting 
inclusive  growth  through  smart  reforms  and  investments,  preventing  excessive  public  budget 
deficits, and bolstering Member States’ ownership of the framework. The reform also reinforced 
economic oversight across the Union, ensuring that all Member States are treated fairly and equally 
while subject to policy coordination at the Union level. 

To achieve those goals, the 2024 reform  introduced a novel method of fiscal governance with 
new concepts and processes. A key change was the introduction of the national medium-term 
fiscal-structural plans, which focus on net expenditure paths and setting out national reform and 
investment  commitments. This  implemented a broader strategy to  provide Member States with 
more ownership, while ensuring fiscal responsibility and strengthening compliance with the Union 
fiscal rules (also referred to as the Stability and Growth Pact).  

The  2024  reform  makes  it  necessary  to  align  a  number  of  elements  in  other  pieces  of 
legislation to ensure consistency of the entire governance framework. Given the priority for 
the co-legislators to  agree on  the  core  elements  of the  reform  of the EU  economic governance 
framework, the Commission at that time did not propose amendments to other pieces of legislation. 

1 Regulation (EU) 2024/1263 of the European Parliament and of the Council of 29 April 2024 on the effective 
coordination of economic policies and on multilateral budgetary surveillance and repealing Council Regulation (EC) 
No 1466/97 (OJ L, 2024/1263, 30.4.2024, ELI: http://data.europa.eu/eli/reg/2024/1263/oj). 
2 Council Regulation (EC) No 1467/97 of 7 July 1997 on speeding up and clarifying the implementation of the 
excessive deficit procedure (OJ L 209, 2.8.1997, p. 6, ELI: http://data.europa.eu/eli/reg/1997/1467/oj). 
3 Council Directive 2011/85/EU of 8 November 2011 on requirements for budgetary frameworks of the Member 
States (OJ L 306 23.11.2011, p. 41, ELI: http://data.europa.eu/eli/dir/2011/85/oj). 
4 Regulation (EU) No 1173/2011 of the European Parliament and of the Council of 16 November 2011 on the 
effective enforcement of budgetary surveillance in the euro area (OJ L 306, 23.11.2011, p. 1, ELI: 
http://data.europa.eu/eli/reg/2011/1173/oj). 
5 Regulation (EU) No 473/2013 of the European Parliament and of the Council of 21 May 2013 on common 
provisions for monitoring and assessing draft budgetary plans and ensuring the correction of excessive deficit of the 
Member States in the euro area (OJ L 140, 27.5.2013, p. 11, ELI: http://data.europa.eu/eli/reg/2013/473/oj). 
6 Regulation (EU) No 472/2013 of the European Parliament and of the Council of 21 May 2013 on the strengthening 
of economic and budgetary surveillance of Member States in the euro area experiencing or threatened with serious 
difficulties with respect to their financial stability (OJ L 140, 27.5.2013, p. 1, ELI: 
http://data.europa.eu/eli/reg/2013/472/oj). 

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This in particular concerns Regulation 1173/2011, Regulation 473/2013 and Regulation 472/2013. 
The  Commission  now  proposes  amendments  to  these  regulations  to  address  outstanding 
inconsistencies. Those amendments are mostly of technical nature but they also seek to further 
simplify the EU economic governance framework. In its Communication of 11 February 2025 
entitled ‘A simpler and faster Europe: Communication  on implementation  and simplification’,7 
the  Commission  set  out  a  vision  for  an  implementation  and  simplification  agenda  that  aims  to 
boost  competitiveness  and  safeguard  economic,  social  and  environmental  goals  by  reducing 
regulatory burdens and simplifying Union law, thereby making its implementation easier. They do 
not reduce the quality or the scope of the surveillance, but remove certain reporting requirements 
that do not add value.  

The  Commission  also  proposes  to  simplify  the  funding  arrangements  for  non-euro-area 
Member States that are experiencing, or are seriously threatened with, difficulties in their 
balance  of  payments.  Specifically,  a  transition  from  a  back-to-back  financing  approach  to  a 
diversified  funding  strategy  is  proposed  for  Council  Regulation  (EC)  No  332/2002 8 ,  which 
establishes a medium-term financial assistance facility for Member States that have not adopted 
the  euro  and  are  experiencing,  or  are  seriously  threatened  with,  difficulties  in  their  balance  of 
current payments or capital movements. 

The remainder of this staff working document is organised as follows: Section 2 sets out the 
proposed amendments to Regulation 1173/2011 and Regulation 473/2013, which form part of the 
Union fiscal rules. Section 3 sets out the proposed amendments to Regulation 472/2013. Section 4 
sets out the proposed amendments to Council Regulation 332/2002.  

2.  Alignment and simplification of Union fiscal rules 

The  Commission  proposes  amendments  to  further  streamline  and  simplify  the  fiscal 
surveillance elements of the Union economic governance framework. These amendments align 
Regulation  1173/2011  and  Regulation  473/2013  with  the  2024  reform  of  Union  economic 
governance  framework,  thus  ensuring  consistency  across  all  elements  of  the  framework. 
Additionally, the amendments introduce several simplifications, reducing the administrative and 
reporting burden for euro area Member States, and contributing to the Commission’s simplification 
agenda. 

Regulation 1173/2011  

Regulation 1173/2011 was designed in the aftermath of the 2011 euro area sovereign debt 
crisis to enforce budgetary surveillance in the euro area, with the aim of maintaining fiscal 

7 Communication from the Commission to the European Parliament, the Council, the European Economic and Social 
Committee and the Committee of the Regions of 11 February 2025, ‘A simpler and faster Europe: Communication on 
implementation and simplification’, COM(2025) 47 final. 
8 Council Regulation (EC) No 332/2002 of 18 February 2002 establishing a facility providing medium-term 
financial assistance for Member States' balances of payments (OJ L 53, 23.2.2002, p. 1, 
ELI: http://data.europa.eu/eli/reg/2002/332/oj). 

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discipline  and  ensuring  the  proper  functioning  of  economic  and  monetary  union.  The 
regulation  outlines  a  system  of  sanctions  to  enhance  compliance  with  both  the  preventive  and 
corrective  arms  of  the  Stability  and  Growth  Pact.  It  enables  the  imposition  of  fines  and  other 
penalties on Member States for failing to meet budgetary obligations or manipulating budgetary 
statistics.  It  incorporates  dialogue  with  the  European  Parliament  and  allocates  revenue  from 
financial sanctions to stability mechanisms to support the euro area's financial stability. While the 
regulation’s objectives remain relevant,  its  content  is  now partly  inconsistent  with  the new  EU 
economic governance framework adopted by the co-legislators in 2024.  

The  Commission's  proposals  aim  to  align  the  regulation  with  the  reformed  Stability  and 
Growth  Pact  which  reduced  the  amount  of  financial  sanctions  and  made  their 
implementation more gradual, while maintaining the current approach for sanctions related 
to  the  manipulation  of  statistics.  The  proposed  changes  seek  to  update  or  discard  obsolete 
provisions, ensure compatibility with revised Regulation 1467/97, and reduce the magnitude of 
financial sanctions. With the elimination of the significant deviation procedure in the preventive 
arm of the Stability and Growth Pact, the related financial sanctions are outdated and should be 
deleted. Other elements of Regulation 1173/2011 are no longer aligned with the revised Regulation 
1467/97, particularly regarding the magnitude of financial sanctions. Existing provisions also no 
longer respect the principle of a fair graduation of sanctions, as set out in Recital 22 of Regulation 
1173/2011.  It  is  thus  proposed  to  delete  financial  sanctions  related  to  Council  decisions  under 
Article 126(6) TFEU and revise those related to Council decisions under Article 126(8) TFEU. 
While  it  is  not  proposed  to  modify  the  application  of  sanctions  related  to  the  manipulation  of 
statistics, the power to adopt delegated acts related to the imposition of those sanctions is no longer 
needed and should be deleted. 

Regulation 473/2013  

Regulation 473/2013 aims to enhance the monitoring and coordination of budgetary policies 
in the euro area to ensure fiscal discipline and economic policy alignment among Member 
States.  The  regulation  established  common  provisions  for  assessing  draft  budgetary  plans  and 
correcting  excessive  deficits,  thus  strengthening  the  Stability  and  Growth  Pact.  It  emphasises 
maintaining sound public finances, securing sustainable economic growth, and fostering macro-
financial stability through coordinated economic policy and surveillance, with specific measures 
for euro area countries to prevent spill-over effects from individual fiscal policies. The regulation 
also promotes transparency and accountability by involving national parliaments and the European 
Parliament  in  economic  dialogues,  and  coordinating  with  independent  bodies  for  consistent 
macroeconomic forecasts. It still however entails some concepts that have become obsolete with 
the adoption of the new EU economic governance framework. 

The proposed amendments to Regulation 473/2013 fully align it with the new EU economic 
governance  framework.  The  proposals  address  three  main  inconsistencies  with  the  new 
framework: (i) references to Stability Programmes and National Reform Programmes, which have 

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been  merged  into  the  national  medium-term  fiscal-structural  plans;  (ii) outdated  references  to 
concepts, such as the medium-term objective  and the adjustment path towards it, that should be 
replaced with concepts introduced by the 2024 reform; and (iii) a number of cross-references to 
other  elements  of  the  framework  that  have  become  outdated.  The  proposal  also  eliminates 
inconsistencies with the reformed Council Directive 2011/85 on national budgetary frameworks 
and, for simplification purposes, avoids repeating the provisions of that Directive. The proposal 
also ensures consistency with the proposed amendments to Regulation 1173/2013.   

The  proposed  amendments  also  seek  to  streamline  processes  and  reduce  the  reporting 
burden on Member States. These changes will lead to savings for Member States in relation to 
administrative costs associated with compliance with those reporting requirements. The proposed 
amendments include the deletion of the economic partnership programmes for Member States in 
the excessive deficit procedure,  certain  data  and  reporting requirements that  have not  provided 
value-added to surveillance processes in the past, and additional reporting obligations required for 
euro  area  Member  States  under  the  excessive  deficit  procedure.  With  regard  to  the  latter,  it  is 
instead proposed that Member States subject to a recommendation under Article 126(7) TFEU or 
a notice under Article 126(9) TFEU submit effective action reports to the Commission and the 
Council  every  six  and  three  months,  respectively,  until  the  abrogation  of  the  excessive  deficit 
procedure. These effective action reports can be included in the Annual Progress Reports defined 
in  Regulation  2024/1263,  to  further  reduce  the  reporting  burden  on  Member  States.  The 
Commission nevertheless retains the right to ask for any additional information it deems necessary 
for budgetary surveillance purposes. The proposal also eliminates obsolete requirements such as 
the need to propose additional corrective measures when there are risks of non-compliance with 
the excessive deficit procedure. Overall, these amendments  will contribute to a more  coherent, 
efficient, and transparent economic governance framework. 

3.  Alignment and simplification of surveillance for situations of threats to financial stability  

Regulation  472/2013  strengthens  the  economic  and  budgetary  surveillance  for  euro-area 
Member States that: (a) experience or are threatened by serious difficulties with respect to their 
financial stability, leading to potential spill-over effects on other euro area Member States; or (b) 
request or receive financial assistance. The regulation consists of three main elements: 

• 

• 

• 

It empowers the Commission to subject a euro area Member State to enhanced surveillance 
in case of threats to its financial stability that are likely to have adverse spill-overs on other 
euro area Member States, or when it is in receipt of precautionary financial assistance. 
It sets out the legal framework for macroeconomic adjustment programmes associated with 
financial assistance, thus ensuring that they are properly aligned and synchronised with the 
EU economic governance framework.  
It  establishes  the  rules  governing  post-programme  surveillance,  applicable  once  a 
macroeconomic adjustment programme ends and until 75% of the received assistance is 
repaid.  

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The Commission is proposing amendments to Regulation 472/2013 to enhance the coherence 
and efficiency of the procedures for euro area Member States experiencing or threatened 
with serious difficulties with respect to their financial stability and with a risk of adverse spill 
overs  on  other  members  of  the  euro  area.  These  amendments  align  the  Regulation  with  the 
updated EU economic governance framework and institutional developments since the Regulation 
was adopted, ensuring a unified and consistent approach across all elements of the framework. 
Additionally,  building  on  evaluations9 and  experience,  the  proposed  changes  introduce  several 
targeted simplifications, designed to lighten the administrative and reporting obligations for euro 
area Member States, and contribute to the Commission's simplification agenda.  

Since  its  adoption  in  2013,  the  institutional  and  regulatory  context  for  the  application  of 
Regulation 472/2013 has significantly evolved, in part due to the review of the EU economic 
governance  framework.  In  addition,  during  this  period,  the  Commission  has  gained  valuable 
insights and experience regarding the activation of both enhanced surveillance when a euro area 
Member State is in receipt of precautionary financial assistance, and post-programme surveillance 
when a Member State exits a macroeconomic adjustment programme. In particular, experience has 
shown that the current design of enhanced surveillance may have a deterrent effect on Member 
States seeking precautionary financial assistance and may result in the application of additional 
surveillance when not warranted. In addition, the European Court of Auditors, in its Special Report 
No  18/2021 10 ,  has  identified  certain  shortcomings  in  the  effectiveness  of  post-programme 
surveillance, including a lack of clear focus and objectives, as well as overlaps and duplication 
with other economic surveillance processes, such as the European Semester. 

The proposed amendments to Regulation 472/2013 therefore fully align it with the new EU 
economic governance framework by merging references to Stability Programmes and National 
Reform  Programmes  into  the  national  medium-term  fiscal-structural  plans,  and  addressing  any 
remaining inconsistency with the reformed framework. The proposed amendments also align the 
provision of the Regulation with the division of tasks introduced by Regulation (EU) 1024/2013, 
which conferred specific prudential supervision responsibilities to the European Central Bank.  

Building on experience and past evaluations, supplementary changes to Regulation 472/2013 
are  proposed  to  optimise  and  fine-tune  the  processes  of  enhanced  surveillance  and  post-
programme  surveillance.  Those  changes  introduce  a  series  of  targeted  improvements  and 
simplifications to Regulation 472/2013, thereby contributing to the Commission's simplification 
agenda. 

The proposal first clarifies the mandatory application of enhanced surveillance when a euro 
area Member State is in receipt of precautionary financial assistance, explicitly linking its 
application  to  precautionary  support  that  requires  new  policy  measures.  These  changes 

9 European Court of Auditors Special Report 18/2021: Commission’s surveillance of Member State exiting a 
macroeconomic adjustment programme: an appropriate tool in need of streamlining. 

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should enable a more targeted application of enhanced surveillance in the context of requests for 
precautionary  financial  assistance,  limiting  its  application  only  to  cases  when  it  is  actually 
necessary. In doing so the proposed amendments are expected to reduce the reporting burden on 
Member  States  requesting  precautionary  financial  assistance  that  does  not  require  new  policy 
measures.  

Second, the proposed amendments also clarify the scope and objective of post-programme 
surveillance,  with  post-programme  surveillance  focusing  on  monitoring  and  assessing  the 
repayment  capacity  of  Member  States  that  have  received  financial  assistance  and  the 
implementation  of  relevant  reforms  not  already  covered  by  the  national  medium-term  fiscal-
structural plan.  

To ensure that surveillance is well defined and proportionate, the amendments also introduce 
a tiered system that differentiates the level of scrutiny according to repayment risk and the 
need for corrective measures. A key feature of this system is a specific assessment of the Member 
State's capacity to repay the financial assistance received carried out by the Commission, which 
would occur after five years of continuous application of post programme surveillance, in order to 
verify that the level of scrutiny of post-programme surveillance continues to be aligned with the 
assessed repayment risk. If the assessment of the Member State's capacity to repay the financial 
assistance  received  concludes  that  there  are  no  material  risks  to  repayment,  and  following  an 
opinion from the Economic and Financial Committee, there would be the possibility to suspend 
regular  assessments  for  a  period  of  five  years.  These  changes  streamline  surveillance  when 
warranted,  reducing  the  administrative  and  reporting  burden  on  Member  States,  and  allow  for 
budgetary savings as missions to Member States under post-programme surveillance as well as the 
accompanying  reports would be suspended  Furthermore, this revised approach should ensure that 
post-programme  surveillance  is  fully  aligned  with  the  EU's  economic  governance  framework, 
eliminating unnecessary duplication of monitoring and reporting requirements. As a result, these 
changes are expected to reduce the administrative and reporting burden on national authorities, 
while maintaining the effectiveness of post-programme surveillance in assessing potential risks to 
the repayment of financial assistance received by Member States. 

4.  Alignment and simplification of the funding arrangements for the balance of payments 

facility 

Council Regulation 332/2002 establishes a medium-term financial assistance facility enabling 
loans to be granted to one or more Member States that have not adopted the euro and are 
experiencing,  or  are  seriously  threatened  with,  difficulties  in  their  balance  of  current 
payments or capital movements. The facility’s funding method set out in Council Regulation 
332/2002 is based on back-to-back financing. Under this funding method each specific borrowing 
transaction by the Commission is directly linked to  a disbursement, with a pass  through of the 
same conditions. 

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Since the adoption of Council Regulation 332/2002, the Commission has been authorised to 
implement a different funding method to fund programmes of financial assistance such as 
the Macro-Financial Assistance (MFA)+ for Ukraine through a diversified funding strategy. 
Specifically, Article 224 of Regulation (EU, Euratom) 2024/2509 provides for the implementation 
of a diversified funding strategy. This method of funding allows the Commission to decouple the 
timing and the maturity of single funding transactions from the disbursements to beneficiaries. A 
common liquidity pool financed by the issuance of short-term funding enables the Commission to 
organise payments independently of the exact timing of the bond issuance.  

This diversified funding strategy offers several advantages over the back-to-back approach. 
First, it avoids the need to contract a fixed amount of EU borrowings on capital markets or from 
financial institutions in volatile or adverse conditions to fund programme of financial assistance, 
allowing for payments to Union programme beneficiaries to be made independently of the market 
conditions prevailing at the time of the disbursement. This is beneficial since financial assistance 
available to Member States under the facility is meant to be disbursed rapidly in order to restore 
financial  stability,  and  as  such  assistance  is  often  disbursed  in  volatile  and  adverse  market 
conditions.  Second,  it  enables  the  Commission  to  consolidate  the  financial  needs  of  multiple 
assistance programmes, preventing individual programmes from competing for a limited pool of 
funding opportunities. This consolidation simplifies management of funding operations, reduces 
costs, and avoids the fragmentation of Union debt  securities, thereby  enhancing  their liquidity. 
Consequently, the cost-effectiveness of financing for financial assistance programmes is enhanced, 
benefiting both the Union and the beneficiaries. 

Building on the experience gained and the benefits of a diversified funding strategy, which 
offers a more streamlined and cost-effective solution compared to traditional back-to-back 
funding methods, it is proposed to clarify the funding arrangements for utilizing the balance 
of payments  facility.  This  amendment  would  allow the Commission to further  consolidate the 
financing of EU financial programmes by incorporating the facility's funding requirements into its 
general funding strategy. This would in turn enable the realization of budgetary savings and further 
simplify  the  funding  process,  thereby  enhancing  the  overall  efficiency  of  the  facility,  and 
contribute  to  the  Commission’s  simplification  agenda.  The  proposal  therefore  makes  technical 
targeted  changes  to  Council  Regulation  332/2002  in  order  to  organise  the  financial  assistance 
under the diversified funding strategy provided for in Article 224 of the Regulation (EU, Euratom) 
2024/2509. 

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