The European Commission today adopted proposals for targeted amendments to some of the EU’s economic governance rules. These changes aim to ensure consistency with the comprehensive reform conducted in April 2024, while reducing reporting and administrative burdens and simplifying financing mechanisms to aid non-euro area member states facing balance of payments difficulties, the institution stated in a release.
According to Brussels, these proposals will simplify EU legislation, eliminate redundant administrative requirements, and make financial assistance more efficient.
Specifically, the European Commission seeks to streamline certain elements of the EU economic governance framework related to budgetary oversight to reduce reporting burdens, align rules for applying financial sanctions, and eliminate inconsistencies.
The institution also aims to amend the regulation concerning enhanced post-program surveillance for euro area countries facing or at risk of severe financial difficulties, intending to enhance budgetary oversight in preventive financial assistance and post-program periods.
In today’s package, the European Commission further proposes changes to the balance of payments financing mechanisms to ensure that non-euro member states do not face significant challenges in managing their international transactions.
The European Union’s economic governance framework constitutes a set of rules and mechanisms guiding the economic and budgetary policies of member states, centering on the EU’s budgetary rules established by the Stability and Growth Pact.
These rules set limits on the deficit (3% of GDP) and public debt (60% of GDP), requiring the presentation of budgetary plans to the European Commission and the Council, which supervise their application through the European Semester and, in cases of non-compliance, may activate the Excessive Deficit Procedure.
Besides budgetary control, the framework also includes macroeconomic surveillance and support mechanisms for member states in financial difficulties.
Last year, this system underwent a comprehensive reform to simplify rules, make them more transparent and flexible, while simultaneously strengthening fiscal discipline and crisis response capacity.
Due to crises such as the COVID-19 pandemic and the war in Ukraine, the EU’s budgetary rules were suspended and resumed last year, becoming fully effective in 2025.
Despite maintaining the usual ceilings for public debt and deficit, national plans have been created considering each country’s reality for downward trajectories, along with the introduction of annual public spending caps for maximum deviation.
