CELEX: 51996PC0496(02)
Language: en
Date: 1996-10-16
Title: Proposal for a COUNCIL REGULATION (EC) on speeding up and clarifying the implementation of the excessive deficit procedure

Avis juridique important

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51996PC0496(02)

Proposal for a COUNCIL REGULATION (EC) on speeding up and clarifying the implementation of the excessive deficit procedure  /* COM/96/0496 FINAL - CNS 96/0248 */  

Official Journal C 368 , 06/12/1996 P. 0012

Proposal for a Council Regulation (EC) on speeding up and clarifying the implementation of the  excessive deficit procedure (96/C  368/07) COM(96) 496 final - 96/0248(CNS)(Submitted by  the Commission on 18 October 1996) THE COUNCIL OF THE EUROPEAN UNION, Having regard to the Treaty establishing the European Community, and in particular the second  subparagraph of Article 104 (c) (14) thereof, Having regard to the proposal from the Commission, Having regard to the opinion of the European Parliament, Having regard to the opinion of the European Monetary Institute, (1) Whereas the maintenance of sound budgetary positions in the Member States creates the  appropriate conditions for the sustained growth of output and employment; whereas budgetary  discipline will be required in the third stage of economic and monetary union to ensure monetary  stability; (2) Whereas national budgetary policies need to be set so as to create room for manoeuvre in  adapting to exceptional and cyclical disturbances and so as to avoid excessive deficits; whereas  there is a case for giving a rigorous interpretation to the concept of exception and temporary  circumstances which could involve quantifying the concept of significantly negative real growth; (3) Whereas the Protocol No 5 on the excessive deficit procedure contains provisions relating to  the implementation of the procedure foreseen in Article 104 (c); whereas further implementing  provisions are necessary; whereas, according to the second subparagraph of Article 104 (c) (14),  the Council shall adopt the appropriate provisions to that effect; whereas the provisions of this  Regulation together with those of the Protocol constitute a new integrated set of rules; (4) Whereas, according to Article 109 (k) (3), Articles 104 (c) (9) and (11) only apply to those  Member States having adopted a single currency; (5) Whereas there is a need to establish deadlines for the application of the excessive deficit  procedure in order to ensure its expeditious and effective application; whereas there is a need to  specify how the sanctions foreseen in Article 104 (c) of the Treaty could be imposed on Member  States which persistently fail to correct an excessive deficit situation in order to ensure the  effective application of the excessive deficit procedure; (6) Whereas the present regulation forms part of the stability pact for ensuring budgetary  discipline in stage three of economic and monetary union (EMU); whereas the pact includes two main  elements: (i) strengthening the surveillance and coordination of budgetary positions; and (ii)  speeding up and clarifying the implementation of the excessive deficit procedure; whereas the first  of these elements provides an early warning system in which divergences from Member States'  medium-term budgetary paths are identified and recommendations made by the Council to take  corrective action well before a deficit position seems excessive; (7) Whereas the rules for such a strengthening of the surveillance and coordination of budgetary  positions have been laid down in Council Regulation [.  .  .]; (8) Whereas the reinforced surveillance in the terms of Regulation [.  .  .] together with the  Commission's monitoring of budgetary positions in accordance with paragraph 2 of Article 104 (c)  provide a basis for a rapid implementation of the excessive deficit procedure; (9) Whereas, in the light of the above, an overall maximum period of 10 months from the reporting  date or any other activation of the procedure until, if necessary, the imposition of sanctions  seems both feasible and appropriate in order to exert pressure on the Member State to implement  corrective measures; in the event of a procedure starting in March this could lead to sanctions  being imposed within the calendar year in which the procedure has been started; (10) Whereas the issuing of a Council recommendation or the later steps of the excessive deficit  procedure will come as no surprise to a government, which will effectively have had a much longer  period in which to prepare corrective measures. Whereas the seriousness of moving into excessive  deficit in stage three should call for urgent action from all those involved; (11) Whereas when acting with a view to correct the excessive deficit the government of the Member  State concerned will, if required by national law, take measures associating the national  parliament; whereas the national decision-making process in accordance with Article 3 of the  Protocol No 5, should not, as such, hinder the expeditious implementation of the excessive deficit  procedure; (12) Whereas it is considered that, in order to ensure that the excessive deficit procedure has a  sufficient deterrent effect, a non-interest-bearing deposit of appropriate size should be required  from the Member State concerned when the Council decides to impose a sanction; (13) Whereas the definition of sanctions on a prescribed scale removes uncertainties and would thus  allow those involved in the procedure to have full information about it; whereas it is appropriate  to relate the amount of the deposit to the GDP of the Member State concerned; whereas it is  appropriate that the deposit should consist of a fixed component due in all cases when pecuniary  sanctions are imposed and a variable component proportional to the excess of the deficit over the 3   % of GDP reference value; whereas it is also appropriate to fix a maximum amount, as a percentage  of GDP, to the sanctions for the latter not to have counterproductive effects; (14) Whereas in the event that the constitution of a non-interest-bearing deposit does not induce  the Member State concerned to correct its excessive deficit then it is appropriate to intensify the  sanctions; whereas it is therefore appropriate to transform the deposit into a fine in such an  event and require the Member State concerned to constitute a new non-interest-bearing deposit; (15) Whereas action by the Member State concerned with a view to correcting its excessive deficit  is the first step towards abrogation of sanctions; whereas significant progress in correcting the  excessive deficit should allow for some lifting of sanctions in accordance with Article 104 (c)  (12); whereas the abrogation of all outstanding sanctions should only occur once the excessive  deficit has been corrected; (16) Whereas Council Regulation (EC) No 3605/93 of 22 November 1993 on the application of the  protocol on the excessive deficit procedure annexed to the Treaty establishing the European  Community  (1) sets detailed rules for the reporting of budgetary data by the Member States, (17) Whereas, according to Article 109 (f) (8), where the Treaty provides for a consultative role  for the European Central Bank (ECB), references to the ECB shall be read as referring to the  European Monetary Institute before the establishment of the ECB, HAS ADOPTED THIS REGULATION: SECTION 1 Speeding up the excessive deficit procedure Article 1 1.  The  Council shall decide on the existence of an excessive deficit in accordance with Article 104 (c)  (6), within three months of the reporting dates established in Articles 4 (2) and 4 (3) of  Regulation (EC) No 3605/93. Where it decides on the existence of an excessive deficit in accordance  with Article 104 (c) (6) the Council shall issue recommendations to the Member State concerned in  accordance with Article 104 (c) (7) at the same time. 2.  The excess of a government deficit over the reference value shall be considered exceptional and  temporary, in accordance with the second indent of Article 104 (c) (2a), when resulting from an  unusual event outside the control of the relevant Member State and which has a major impact on the  financial position of the general government, or when resulting from a severe economic downturn, in  particular in the case of significantly negative annual real growth. In addition, if the unusual  event or the severe economic downturn has come to an end or if it is forecast that it will come to  an end in the calendar year following the year in which the deficit exceeds the reference value,  budgetary forecasts provided by the Commission must indicate that the deficit would fall below the  reference value in this same following year. Article 2 1.  Any Council decision to make its recommendations public having established that no  effective action has been taken in accordance with Article 104 (c) (8) shall be taken within four  months of the decision on the existence of an excessive deficit taken in accordance with Article  104 (c) (6) and the issuing of recommendations in accordance with Article 104 (c) (7). 2.  The Council, when considering whether effective action has been taken in response to its  recommendations issued in accordance with Article 104 (c) (7), may base its decision on official  public decisions by the Government of the Member State concerned. If these official public  decisions are not, if necessary, enacted by national legislatures within a time limit to be defined  by the Council in its recommendations issued in accordance with Article 104 (c) (7), or if the  decisions are modified substantially during the adoption process, then the Council shall reconsider  whether effective action has been taken. Article 3 Any Council decision to give notice to the Member State to take measures for the  deficit reduction in accordance with Article 104 (c) (9) shall be taken within one month of the  Council decision that no effective action has been taken in accordance with Article 104 (c) (8). Article 4 Where the conditions to apply Article 104 (c) (11) are met, the Council will, as a  rule, decide to impose sanctions in accordance with Article 104 (c) (11). Any such decision shall  be taken no later than two months after the Council decision to give notice to the Member State to  take measures in accordance with Article 104 (c) (9). Article 5 The total time between the reporting dates referred to in Article 1 of this Regulation  and a Council decision on the imposition of sanctions referred to in Article 4 of this Regulation  shall not exceed 10 months. Article 6 Any Council decision to intensify sanctions (other than the imposition of fines dealt  with in Article 9 of this Regulation) in accordance with Article 104 (c) (11), or to abrogate some  or all of its decisions in accordance with Article 104 (c) (12), shall be taken no later than two  months after the reporting dates pursuant to Regulation (EC) No 3605/93. SECTION 2 Sanctions Article 7 Whenever the Council decides to apply sanctions to a Member State  in accordance with Article 104 (c) (11), a non-interest-bearing deposit would, as a rule, be  required. The Council may decide to supplement this deposit by the measures foreseen in the first  and second indents of Article 104 (c) (11). Article 8 When the excessive deficit results from non-compliance with the criterion relating to  the government deficit ratio in Article 104 (c) (2a), the amount of the deposit shall comprise of a  fixed component equal to 0,2  % of GDP, and a variable component equal to one tenth of the  difference between the deficit as a percentage of GDP of the year in which such deficit was deemed  excessive and the reference value. An upper limit of 0,5  % of GDP is set for the annual amount of  deposits. When the excessive deficit results only from non-compliance with the criterion relating to the  government debt ratio in Article 104 (c) (2b), the amount of the deposit shall comprise of a fixed  component equal to 0,2  % of GDP. Article 9 The initial deposit will, as a rule, be converted into a fine if within the two  subsequent years the excessive deficit has, in the view of the Council, not been corrected. The  Council may decide to supplement this fine by the measures foreseen in the first and second indents  of Article 104 (c) (11) if the latter had not been applied at the moment of imposing sanctions. At  the same time the Member State should be required to make a new non-interest-bearing deposit  calculated according to the rule set out in Article 8 of this Regulation. Article 10 In accordance with Article 104 (c) (12), the Council may decide to abrogate some or  all the sanctions defined in the first and second indents of Article 104 (c) (11) to the extent  that the Member State is making significant though not yet sufficient progress in correcting the  excessive deficit. Article 11 In accordance with Article 104 (c) (12), the Council shall abrogate all outstanding  sanctions if the decision on the existence of an excessive deficit is abrogated. Fines imposed in  accordance with Article 9 of this Regulation will not be returned to the Member State concerned. Article 12 Deposits as specified in Article 8 of this Regulation shall be lodged with the  Commission. Interest on the deposits, and fines specified in Article 9 of this Regulation  constitute resources of the general budget of the European Communities. Article 13 This Regulation shall enter into force on 1 January 1999. This Regulation shall be binding in its entirety and directly applicable in all  Member States.(1)  OJ No L 332, 31. 12. 1993, p. 7.