The fiscal compact and its implementation in member states

by: in Law
Fiscal Compact_EU flags

Last February, the European Commission issued its report on the Member States’ compliance with their implementation duties under the Fiscal Compact. Following a rather generous and prudent assessment, the Commission considers that all States have fulfilled their obligations.

Written by Diane Fromage and Paul Dermine, Faculty of Law, Maastricht University.

The “Fiscal Compact - Taking Stock” Report - Better Late than Never
On 22 February 2017, the European Commission eventually published the report it had to prepare on the introduction by the Member States of the famous budgetary “golden rule” contained in Title III (Fiscal Compact) of the Treaty on Stability, Coordination and Governance in the Economic and Monetary Union (TSCG). Article 8(1) TSCG indeed states that ‘The European Commission is invited to present in due time to the Contracting Parties a report on the provisions adopted by each of them in compliance with Article 3(2)’. Article 3(2) requires Member States to anchor the balanced budget rule (BBR) and an automatic correction mechanism (ACM) in ‘provisions of binding force and permanent character, preferably constitutional, or otherwise guaranteed to be fully respected and adhered to throughout the national budgetary processes’.

Furthermore, Member States should also set up national independent institutions in charge of monitoring the compliance with these provisions. Note that no obligation rested on the Commission as to the moment in which it had to present its report, this only being necessary ‘on due time’. Yet, given that Article 8 TSCG provides for quasi-automatic judicial review should the Commission find that a Member State has not respected its obligations, some had been eagerly awaiting this report, finally published in the most discreet manner one month ago.

The Commission opted for presenting a general report (in which it assesses compliance with the three obligations mentioned above) and individual reports for each of the Member States bound by Article 3(2), i.e. all Euro area Member States and Bulgaria, Denmark and Romania since Hungary, Poland and Sweden are signatories to the TSCG but not to the Fiscal Compact. Here the focus is set on the general report.

This blog is published on Law Blogs Maastricht and originally published on EUFINACCO.  
Image by Jean-Etienne Minh-Duy Poirrier on Flickr

 Read more on BBR’s and ACM’s