08 March 2016

Eurogroup Statement on follow-up to the Draft Budgetary Plans for 2016

The Eurogroup takes note that developments in several Member States are leading to a slightly higher deficit level in the euro area as a whole than was projected. At the Member State level, there are increased risks that some budgets do not comply with obligations under the SGP in 2016.

Member States' budgets that are currently considered compliant with the SGP based on the winter forecast are Germany, Estonia, Luxembourg and Slovakia.

The budget of the Netherlands, which was assessed as compliant in November, is now assessed as broadly compliant. Member States' budgets that are also considered broadly compliant with the SGP based on the winter forecast are Latvia, Malta, Finland, Ireland, and France. In the case of France, the assessment of broad compliance hinges on the projected achievement of the 2016 headline deficit target contained in the EDP recommendation. At the same time, the projected structural effort falls significantly short of the requirements of the EDP recommendation. [...]

The Eurogroup also recognises that, for a number of Member States, compliance with the SGP is at risk.

Member States under the preventive arm whose plans are at risk of non-compliance with the rules of the SGP should take, in a timely manner, additional measures to address the risks identified by the Commission as regards an appropriate convergence towards the MTO or remaining at the MTO and the respect of the debt rule.

• Austria - the Eurogroup notes that no substantial further measures have been taken since the November assessment and there is a risk of a significant deviation from the MTO. According to the winter forecast, the 2016 structural deficit is projected to increase by 0.7% of GDP to 1% of GDP - whereas it should be remaining at the MTO. [...]

• Italy - the Eurogroup notes that additional deficit increasing measures have been taken since the November assessment and there is a risk of a significant deviation from the required adjustment path towards its MTO. According to the Commission winter forecast, the structural balance is projected to deteriorate by 0.7% of GDP in 2016, whereas an improvement of 0.1% is required, taking into account the flexibility already granted. [...]

• Lithuania - the Eurogroup welcomes that additional deficit-reducing measures of 0.1% of GDP have been taken and that projected net expenditure growth has diminished since the November assessment. [...]The 2016 structural deficit is projected to deteriorate by 0.4% of GDP whereas it should remain at the MTO. 

• Belgium - the Eurogroup notes that Belgium, which was considered broadly compliant in the November assessment, is now at risk of non-compliance. According to the Commission winter forecast, the cumulated structural effort over 2015 and 2016 is projected to reach 0.5% of GDP, whereas 1.2% are recommended for an appropriate adjustment path towards the MTO. [...]

• Slovenia - the Eurogroup notes that Slovenia, which was considered broadly compliant in the November assessment, is now at risk of non-compliance. According to the winter forecast, the 2016 structural effort is projected at 0.1% of GDP, whereas 0.6% are recommended for an appropriate adjustment path towards the MTO (on the assumption of a timely and durable correction of the excessive deficit in 2015). [...]

• Spain - the Eurogroup notes that no substantial further measures have been taken since the November assessment and the budget is still at risk of non- compliance with the requirements of the EDP recommendation. The Eurogroup notes that according to the winter forecast, taking into account regional budgets, the headline deficit will be 3.6% of GDP in 2016, which is above the 3% of GDP Treaty reference value and the recommended target of 2.8%. [...]

• Portugal - the Eurogroup reconfirms its statement of 11 February 2016 regarding the risk of non-compliance of Portugal's plan with the requirements of the SGP. Following up on that statement, it was informed that additional measures were under preparation, and that these measures will be implemented when needed to ensure that the 2016 budget will be compliant with the SGP. 

Full press release

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