The European Commission announced today that Cyprus, among six member states, risks missing budgetary targets set for 2017.
According to the definitive European Commission decision of today`s College, five countries (Germany, Estonia, Luxembourg, Slovakia and the Netherlands) are found to be compliant with the requirements for 2017 concerning their budgetary plans, four countries (Ireland, Latvia, Malta, Austria) are found to be broadly compliant (for these countries, the plans might result in some deviation from the adjustment paths towards each country`s medium-term budgetary objective) and for six countries (Belgium, Italy, Cyprus, Lithuania, Slovenia, Finland), the Draft Budgetary Plans pose a risk of non-compliance with the requirements for 2017.
According to the Commission the Draft Budgetary Plans of these Member States might result in a significant deviation from the adjustment paths towards the respective medium-term objective.
Regarding the three countries currently in the corrective arm of the Stability and Growth Pact (the Excessive Deficit Procedure): for France, the DBP is found to be broadly compliant with the requirements for 2017 under the SGP, as the Commission 2016 autumn forecast projects that the headline deficit will be slightly below the Treaty reference value of 3% of GDP in 2017, although there is a significant shortfall in fiscal effort compared to the recommended level and the correction would not be durable in 2018 on the basis of unchanged policies.
For Spain, the DBP is found to be at risk of non-compliance with the requirements for 2017 under the SGP. While acknowledging the no-policy-change nature of these projections, the Commission`s forecast for 2017 projects that neither the intermediate headline deficit target, nor the recommended fiscal effort will be achieved.
For Portugal, the DBP is found to pose a risk of non-compliance with the requirements for 2017 under the SGP, although the projected deviation exceeds the threshold for a significant deviation by a very narrow margin. The risks seem therefore contained provided the necessary fiscal measures are delivered. Portugal, which is currently under the corrective arm, is projected to respect the Treaty reference value of 3% of GDP this year, as recommended. It could become subject to the preventive arm from 2017, if a timely and sustainable correction of the excessive deficit is achieved.
The Commission invites the Council, notably the Eurogroup, and the European Council to discuss and endorse the guidance presented here. It looks forward to further discussion with the European Parliament on the priorities for the EU and euro area.