HTML PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN"L 306/12
EN
Official Journal of the European Union
23.11.2011
REGULATION (EU) No 1175/2011 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL
of 16 November 2011
amending Council Regulation (EC) No 1466/97 on the strengthening of the surveillance of
budgetary positions and the surveillance and coordination of economic policies
THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE
(3)
The SGP is based on the objective of sound government
EUROPEAN UNION,
finances as a means of strengthening the conditions for
price stability and for strong sustainable growth under
Having regard to the Treaty on the Functioning of the European
pinned by financial stability, thereby supporting the
Union, and in particular Article 121(6) thereof,
achievement of the Union's objectives for sustainable
growth and employment.
Having regard to the proposal from the European Commission,
After transmission of the draft legislative act to the national
parliaments,
(4) The
preventive
part
of
the
SGP
requires
that
Member
States achieve and maintain a medium-term budgetary
objective and submit stability and convergence
Having regard to the opinion of the European Central Bank ( 1 ),
programmes to that effect. It would benefit from more
stringent forms of surveillance in order to ensure
Acting in accordance with the ordinary legislative procedure (
Member States' consistency and compliance with the

2 ),
Union's budgetary coordination framework.
Whereas:
(1) The coordination of the economic policies of the
Member States within the Union, as provided for by
(5) The
content of the stability and convergence
the Treaty on the Functioning of the European Union
programmes as well as the procedure for their exam
(TFEU) should entail compliance with the guiding prin
ination should further be developed both at national
ciples of stable prices, sound public finances and
and at the level of the Union in the light of the
monetary conditions and a sustainable balance of
experience gained with the implementation of the SGP.
payments.
(2) The
Stability
and
Growth
Pact
(SGP)
initially
consisted
of
Council Regulation (EC) No 1466/97 of 7 July 1997 on
(6) The
budgetary
targets
in
the
stability
and
convergence
the strengthening of the surveillance of budgetary
programmes should explicitly take into account the
positions and the surveillance and coordination of
measures adopted in line with the broad economic
economic policies
( 3 ), Council Regulation (EC)
policy guidelines, the guidelines for the employment
No 1467/97 of 7 July 1997 on speeding up and clar
policies of the Member States and the Union and, in
ifying the implementation of the excessive deficit
general, the national reform programmes.
procedure ( 4 ) and the Resolution of the European
Council of 17 June 1997 on the Stability and Growth
Pact ( 5 ). Regulations (EC) No
1466/97 and (EC)
No 1467/97 were amended in 2005 by Regulations
(EC) No
1055/2005
( 6 ) and (EC) No
1056/2005
( 7 )
(7) The
submission
and
assessment
of
stability
and
respectively. In addition, the Council Report of
convergence programmes should be made before key
20 March 2005 on ‘Improving the implementation of
decisions on the national budgets for the succeeding
the Stability and Growth Pact’ ( 8 ) was adopted.
years are taken. Therefore, an appropriate deadline for
submission of the stability and convergence programmes
should be established. Taking into account the
( 1 ) OJ C 150, 20.5.2011, p. 1.
( 2 ) Position of the European Parliament of 28 September 2011 (not yet
specificities of the budgetary year of the United
published in the Official Journal) and decision of the Council of
Kingdom, special provisions for the date for submission
8 November 2011.
of its convergence programmes should be established.
( 3 ) OJ L 209, 2.8.1997, p. 1.
( 4 ) OJ L 209, 2.8.1997, p. 6.
( 5 ) OJ C 236, 2.8.1997, p. 1.
( 6 ) Council Regulation (EC) No 1055/2005 of 27 June 2005 amending
Regulation (EC) No 1466/97 on the strengthening of the surveillance
of budgetary positions and the surveillance and coordination of
(8)
Experience gained and mistakes made during the first
economic policies (OJ L 174, 7.7.2005, p. 1).
decade of the economic and monetary union show a
( 7 ) Council Regulation (EC) No 1056/2005 of 27 June 2005 amending
need for improved economic governance in the Union,
Regulation (EC) No 1467/97 on speeding up and clarifying the
which should be built on a stronger national ownership
implementation of the excessive deficit procedure (OJ L 174,
of commonly agreed rules and policies and on a more
7.7.2005, p. 5).
( 8 ) See document 7423/3/05 on http://www.consilium.europa.eu/
robust framework at the level of the Union for the
documents.aspx?lang=en.
surveillance of national economic policies.

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EN
23.11.2011 Official
Journal
of
the
European
Union L
306/13
(9)
The improved economic governance framework should
time before the discussion takes place in the European
rely on several interlinked and coherent policies for
Council. When preparing their stability or convergence
sustainable growth and employment, in particular a
programmes and national reform programmes, Member
Union strategy for growth and jobs, with particular
States should take into account the horizontal guidance
focus on developing and strengthening the internal
by the European Council.
market, fostering international trade and competitiveness,
a European Semester for strengthened coordination of
economic and budgetary policies (European Semester),
an effective framework for preventing and correcting
excessive government deficits (the SGP), a robust
(15) In
order
to
enhance
national
ownership
of
the
SGP,
framework for preventing and correcting macroeconomic
national budgetary frameworks should be fully aligned
imbalances, minimum requirements for national
with the objectives of multilateral surveillance in the
budgetary frameworks, and enhanced financial market
Union, and, in particular, with the European Semester.
regulation and supervision, including macroprudential
supervision by the European Systemic Risk Board.
(16) In
line
with
the
legal
and
political
arrangements
of
each
(10) The SGP and the complete economic governance
Member State, national parliaments should be duly
framework complement and support the Union strategy
involved in the European Semester and in the prep
for growth and jobs. Interlinks between the different
aration of stability programmes, convergence
strands should not provide for exemptions from the
programmes and national reform programmes in order
provisions of the SGP.
to increase the transparency and ownership of, and
accountability for the decisions taken. Where appropriate,
the Economic and Financial Committee, the Economic
Policy Committee, the Employment Committee and the
(11) The strengthening of economic governance should
Social Protection Committee should be consulted within
include a closer and more timely involvement of the
the framework of the European Semester. Relevant stake
European Parliament and the national parliaments.
holders, in particular the social partners, should be
While recognising that the counterparts of the
involved, within the framework of the European
European Parliament in the framework of the dialogue
Semester, on the main policy issues where appropriate,
are the relevant institutions of the Union and their repre
in accordance with the provisions of the TFEU and
sentatives, the competent committee of the European
national legal and political arrangements.
Parliament may offer an opportunity to participate in
an exchange of views to a Member State which is the
subject of a Council recommendation in accordance with
Article 6(2) or Article 10(2). The Member State's partici
pation in such an exchange of views is voluntary.
(17) Adherence to the medium-term objective for budgetary
positions should allow Member States to have a safety
margin with respect to the 3 % of GDP reference value in
order to ensure sustainable public finances, or rapid
progress towards sustainability, while leaving room for
(12) The
Commission
should
have
a
stronger
role
in
the
budgetary manoeuvre, in particular taking into account
enhanced surveillance procedure as regards assessments
the need for public investment. The medium-term
that are specific to each Member State, monitoring, on-
budgetary objective should be updated regularly on the
site missions, recommendations and warnings.
basis of a commonly agreed method reflecting appro
priately the risks of explicit and implicit liabilities for
public finance, as embodied in the aims of the SGP.
(13) The stability and convergence programmes and the
national reform programmes should be prepared in a
coherent manner and the timing of their submissions
should be aligned. Those programmes should be
(18) The
obligation
to
achieve
and
maintain
the
medium-term
submitted to the Council and to the Commission. They
budgetary objective needs to be put into operation,
should be made public.
through the specification of principles for the adjustment
path towards the medium-term objective. Those prin
ciples should, inter alia, ensure that revenue windfalls,
namely revenues in excess of what can normally be
(14) Under the European Semester the policy surveillance and
expected from economic growth, are allocated to debt
coordination cycle starts early in the year with a hori
reduction.
zontal review in which the European Council, based on
input from the Commission and the Council, identifies
the main challenges facing the Union and the euro area
and gives strategic guidance on policies. Discussion
should also take place in the European Parliament at
(19) The
obligation
to
achieve
and
maintain
the
medium-term
the beginning of the annual cycle of surveillance in due
budgetary objective should apply to all Member States.

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L 306/14
EN
Official Journal of the European Union
23.11.2011
(20) Sufficient
progress
towards
the
medium-term
budgetary
situation by the Council and a recommendation for the
objective should be evaluated on the basis of an overall
necessary adjustment measures. The recommendation
assessment with the structural balance as a reference,
should set a deadline of no more than 5 months for
including an analysis of expenditure net of discretionary
addressing the deviation. The Member State concerned
revenue measures. In this regard, and as long as the
should report to the Council on the action taken. If
medium-term budgetary objective is not achieved, the
the Member State concerned fails to take appropriate
growth rate of government expenditure should
action within the deadline set by the Council, the
normally not exceed a reference medium-term rate of
Council should adopt a decision establishing that no
potential GDP growth, with increases in excess of that
effective action has been taken and should report to
norm being matched by discretionary increases in
the European Council. It is important that failures by
government revenues and discretionary revenue
Member States to take appropriate action are established
reductions being compensated by reductions in expen
in due time, in particular where the failure persists. The
diture. The reference medium-term rate of potential
Commission should be able to recommend to the
GDP growth should be calculated according to a
Council to adopt revised recommendations. The
commonly agreed method. The Commission should
Commission should be able to invite the ECB to
make public the calculation method for those projections
participate in a surveillance mission for euro area
and the resulting reference medium-term rate of potential
Member States and for Member States that are partici
GDP growth. The potentially very high variability of
pating in the Agreement of 16 March 2006 between the
investment expenditure should be taken into account,
European Central Bank and the national central banks of
especially in the case of small Member States.
the Member States outside the euro area laying down the
operating procedures for an exchange rate mechanism in
stage three of Economic and Monetary Union ( 1 ) (ERM2),
when appropriate. The Commission should report to the
Council on the outcome of the mission and, if appro
(21) A faster
adjustment path towards the medium-term
priate, should be able to decide to make its findings
budgetary objective should be required for Member
public.
States faced with a debt level exceeding 60 % of GDP,
or with pronounced risks in terms of overall debt
sustainability.
(24) The
power
to
adopt
individual
decisions
establishing
non-compliance with the recommendations adopted by
the Council on the basis of Article 121(4) TFEU estab
(22) A temporary departure from the adjustment path
lishing policy measures in case a Member State
towards the medium-term budgetary objective should
significantly deviates from the adjustment path towards
be allowed, when it results from an unusual event
the medium-term budgetary objective should be
outside the control of the Member State concerned,
conferred on the Council. As part of the coordination
which has a major impact on the financial position of
of the economic policies of the Member States conducted
the general government or in case of severe economic
within the Council, as provided for in Article 121(1)
downturn for the euro area or the Union as a whole,
TFEU, those individual decisions are an integral follow-
provided that this does not endanger fiscal sustainability
up to the referred recommendations adopted by the
in the medium-term, in order to facilitate economic
Council on the basis of Article 121(4) TFEU. The
recovery. The implementation of major structural
suspension of the voting rights of the members of the
reforms should also be taken into account in allowing
Council representing Member States whose currency is
a temporary departure from the medium-term budgetary
not the euro for adoption by the Council of a decision
objective or the appropriate adjustment towards it, on
establishing non-compliance with the recommendations
condition of maintaining a safety margin with respect
addressed to a Member State whose currency is the euro
to the deficit reference value. Special attention should
on the basis of Article 121(4) TFEU, is a direct conse
be paid in this context to systemic pension reforms,
quence of such decision being an integral follow-up of
where the departure should reflect the direct incremental
that recommendation and the provision in Article 139(4)
cost of the diversion of contributions from the publicly
TFEU reserving the right to vote on such recommen
managed to the fully funded pillar. Measures transferring
dations to the Member States whose currency is the euro.
the assets of the fully funded pillar back to the publicly
managed pillar should be considered one-off and
temporary in nature and hence excluded from the
structural balance used for assessing progress towards
the medium-term budgetary objective.
(25) In order to ensure compliance with the budgetary
surveillance framework of the Union for Member States
whose currency is the euro, a specific enforcement
mechanism should be established on the basis of
(23) In the event of a significant deviation from the
Article 136 TFEU for cases of significant deviation
adjustment path towards the medium-term budgetary
from the adjustment path towards the medium-term
objective, a warning should be addressed by the
budgetary objective.
Commission to the Member State concerned, to be
followed within 1 month by an examination of the
( 1 ) OJ C 73, 25.3.2006, p. 21.

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EN
23.11.2011 Official
Journal
of
the
European
Union L
306/15
(26) References
contained in Regulation (EC) No
1466/97
(b) the formulation, and the examination of the imple
should take account of the new Article numbering of
mentation, of the employment guidelines that must
the TFEU.
be taken into account by Member States in accordance
with Article 148(2) TFEU (employment guidelines);
(27) Regulation (EC) No
1466/97 should therefore be
amended accordingly,
(c) the submission and assessment of Member States'
stability or convergence programmes under this Regu
HAVE ADOPTED THIS REGULATION:
lation;
Article 1
Regulation (EC) No 1466/97 is hereby amended as follows:
(d) the submission and assessment of Member States'
national reform programmes supporting the Union's
strategy for growth and jobs and established in line
(1) Article 1 is replaced by the following:
with the guidelines set out in point (a) and (b) and
with the general guidance to Member States issued by
‘Article 1
the Commission and the European Council at the
beginning of the annual cycle of surveillance;
This Regulation sets out the rules covering the content, the
submission, the examination and the monitoring of
stability programmes and convergence programmes as
part of multilateral surveillance by the Council and the
(e) the surveillance to prevent and correct macroeconomic
Commission so as to prevent, at an early stage, the
imbalances under Regulation (EU) No 1176/2011 of
occurrence of excessive general government deficits and
the European Parliament and of the Council of
to promote the surveillance and coordination of
16 November 2011 on the prevention and correction
economic policies thereby supporting the achievement of
of macroeconomic imbalances (*).
the Union's objectives for growth and employment.’.
(2) Article 2 is replaced by the following:
3. In
the
course
of
the
European
Semester,
in
order
to
provide timely and integrated policy advice on macrofiscal
and macrostructural policy intentions, the Council shall, as
‘Article 2
a rule, following the assessment of these programmes on
For the purpose of this Regulation:
the basis of recommendations from the Commission,
address guidance to the Member States making full use
of the legal instruments provided under Articles 121 and
(a) “participating Member States” means those Member
148 TFEU, and under this Regulation and Regulation (EU)
States whose currency is the euro;
No 1176/2011.
(b) “non-participating Member States” means Member
States other than those whose currency is the euro.’.
Member States shall take due account of the guidance
addressed to them in the development of their
(3) The
following
section
is
inserted:
economic, employment and budgetary policies before
taking key decisions on their national budgets for the
succeeding years. Progress shall be monitored by the
‘SECTION 1-A
Commission.
EUROPEAN SEMESTER FOR ECONOMIC POLICY COOR
DINATION
Failure by a Member State to act upon the guidance
Article 2-a
received may result in:
1. In
order
to
ensure
closer
coordination
of
economic
policies and sustained convergence of the economic
performance of the Member States, the Council shall
(a) further recommendations to take specific measures;
conduct multilateral surveillance as an integral part of
the European Semester for economic policy coordination
in accordance with the objectives and requirements set out
(b) a warning by the Commission under Article 121(4)
in the Treaty on the Functioning of the European Union
TFEU;
(TFEU).
2. The
European
Semester
shall
include:
(c) measures under this Regulation, Regulation (EC)
No 1467/97 or Regulation (EU) No 1176/2011.
(a) the formulation, and the surveillance of the implemen
tation, of the broad guidelines of the economic policies
of the Member States and of the Union (broad
Implementation of the measures shall be subject to rein
economic policy guidelines) in accordance with
forced monitoring by the Commission and may include
Article 121(2) TFEU;
surveillance missions under Article -11 of this Regulation.

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L 306/16
EN
Official Journal of the European Union
23.11.2011
4. The
European
Parliament
shall
be
duly
involved
in
(g) Council recommendations addressed to Member States
the European Semester in order to increase the trans
in accordance with Article 121(4) TFEU in the event of
parency and ownership of, and the accountability for the
significant deviation and the report made by the
decisions taken, in particular by means of the economic
Council to the European Council as defined in
dialogue carried out pursuant to Article 2-ab of this Regu
Article 6(2) and Article 10(2) of this Regulation.
lation. The Economic and Financial Committee, the
Economic Policy Committee, the Employment Committee
and the Social Protection Committee shall be consulted
2. The
Council
is
expected
to,
as
a
rule,
follow
the
within the framework of the European Semester where
recommendations and proposals of the Commission or
appropriate. Relevant stakeholders, in particular the social
explain its position publicly.
partners, shall be involved within the framework of the
European Semester, on the main policy issues where
appropriate, in accordance with the provisions of the
3. The competent committee of the European
TFEU and national legal and political arrangements.
Parliament may offer the opportunity to a Member State
which is the subject of a Council recommendation under
The President of the Council, and the Commission in
Article 6(2) or Article 10(2) to participate in an exchange
accordance with Article 121 TFEU, and, where appro
of views.
priate, the President of the Eurogroup, shall report
annually to the European Parliament and to the
European Council on the results of the multilateral
4. The Council and the Commission shall regularly
surveillance. These reports should be a component of
inform the European Parliament of the application of
the Economic Dialogue referred to in Article 2-ab of this
this Regulation.’.
Regulation.
___________
(5) Article
2a
is
replaced
by
the
following:
(*) OJ L 306, 23.11.2011, p. 25.’.
‘Article 2a
(4) The
following
section
is
inserted:
Each Member State shall have a differentiated medium-
‘SECTION 1-Aa
term objective for its budgetary position. These country-
specific medium-term budgetary objectives may diverge
ECONOMIC DIALOGUE
from the requirement of a close to balance or in surplus
position, while providing a safety margin with respect to
Article 2-ab
the 3 % of GDP government deficit ratio. The medium-
1. In order to enhance the dialogue between the insti
term budgetary objectives shall ensure the sustainability of
tutions of the Union, in particular the European
public finances or a rapid progress towards such sustain
Parliament, the Council and the Commission, and to
ability while allowing room for budgetary manoeuvre,
ensure greater transparency and accountability, the
considering in particular the need for public investment.
competent committee of the European Parliament may
invite the President of the Council, the Commission and,
where appropriate, the President of the European Council
Taking these factors into account, for participating
or the President of the Eurogroup to appear before the
Member States and for Member States that are partici
committee to discuss:
pating in ERM2 the country-specific medium-term
budgetary objectives shall be specified within a defined
(a) information provided to the committee by the Council
range between -1 % of GDP and balance or surplus, in
on the broad guidelines of economic policy pursuant
cyclically adjusted terms, net of one-off and temporary
to Article 121(2) TFEU;
measures.
(b) general guidance to Member States issued by the
Commission at the beginning of the annual cycle of
The medium-term budgetary objective shall be revised
surveillance;
every 3 years. A Member State's medium-term budgetary
objective may be further revised in the event of the imple
(c) any conclusions drawn by the European Council on
mentation of a structural reform with a major impact on
orientations for economic policies in the context of the
the sustainability of public finances.
European Semester;
The respect of the medium-term budgetary objective shall
(d) the results of multilateral surveillance carried out under
be included in the national medium-term budgetary
this Regulation;
frameworks in accordance with Chapter IV of Council
Directive 2011/85/EU of 8 November 2011 on
(e) any conclusions drawn by the European Council on
requirements for budgetary frameworks of the Member
the orientations for and results of multilateral
States (*).
surveillance;
(f) any review of the conduct of multilateral surveillance
___________
at the end of the European Semester;
(*) OJ L 306, 23.11.2011, p. 41.’.

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EN
23.11.2011 Official
Journal
of
the
European
Union L
306/17
(6) Article
3
is
amended
as
follows:
chosen macrofiscal scenario and the Commission's
forecast shall be described with reasoning, in particular
(a) paragraph 1 is replaced by the following:
if the level or growth of external assumptions departs
significantly from the values retained in the
Commission's forecasts.
‘1. Each participating Member State shall submit to
the Council and to the Commission information
necessary for the purpose of multilateral surveillance
The exact nature of the information included in points
at regular intervals under Article 121 TFEU in the
(a), (aa), (b), (c) and (d) of paragraph 2 shall be set out
form of a stability programme, which provides an
in a harmonised framework established by the
essential basis for the sustainability of public finances
Commission in cooperation with the Member States.’;
which is conducive to price stability, strong sustainable
growth and employment creation.’;
(d) paragraph 3 is replaced by the following:
(b) in paragraph 2, points (a), (b) and (c) are replaced by
‘3. The information about the paths for the general
the following:
government balance and debt ratio, the growth of
government expenditure, the planned growth path of
‘(a) the medium-term budgetary objective and the
government revenue at unchanged policy, the planned
adjustment path towards that objective for the
discretionary revenue measures, appropriately
general government balance as a percentage of
quantified, and the main economic assumptions
GDP, the expected path of the general
referred to in points (a) and (b) of paragraph 2 shall
government debt ratio, the planned growth path
be on an annual basis and shall cover the preceding
of government expenditure, including the corre
year, the current year and at least the following 3
sponding allocation for gross fixed capital
years.
formation, in particular bearing in mind the
conditions and criteria to establish the expen
diture growth under Article 5(1), the planned
4. Each
programme
shall
include
information
on
its
growth path of government revenue at
status in the context of national procedures, in
unchanged policy and a quantification of the
particular whether the programme was presented to
planned discretionary revenue measures;
the national parliament, and whether the national
parliament had the opportunity to discuss the
Council's opinion on the previous programme or, if
(aa) information on implicit liabilities related to
relevant, any recommendation or warning, and
ageing, and contingent liabilities, such as public
whether there has been parliamentary approval of
guarantees, with a potentially large impact on the
the programme.’.
general government accounts;
(7) Article 4 is replaced by the following:
(ab) information on the consistency of the stability
programme with the broad economic policy
guidelines and the national reform programme;
‘Article 4
1. Stability
programmes
shall
be
submitted
annually
in
(b) the main assumptions about expected economic
April, preferably by mid-April and not later than 30 April.
developments and important economic variables
which are relevant to the achievement of the
stability programme, such as government
2. Member
States
shall
make
public
their
stability
investment expenditure, real GDP growth,
programmes.’.
employment and inflation;
(8) Article 5 is replaced by the following:
(c) a quantitative assessment of the budgetary and
other economic policy measures being taken or
‘Article 5
proposed to achieve the objectives of the
programme, comprising a cost-benefit analysis
1. Based
on
assessments
by
the
Commission
and
the
of major structural reforms which have direct
Economic and Financial Committee, the Council shall,
long-term positive budgetary effects, including
within the framework of multilateral surveillance under
by raising potential sustainable growth;’;
Article 121 TFEU, examine the medium-term budgetary
objectives presented by the Member States concerned in
their stability programmes, assess whether the economic
(c) the following paragraph is inserted:
assumptions on which the programme is based are
plausible, whether the adjustment path towards the
‘2a. The
stability
programme
shall
be
based
on
the
medium-term budgetary objective is appropriate,
most likely macrofiscal scenario or on a more prudent
including consideration of the accompanying path for
scenario. The macroeconomic and budgetary forecasts
the debt ratio, and whether the measures being taken or
shall be compared with the most updated Commission
proposed to respect that adjustment path are sufficient to
forecasts and, if appropriate, those of other inde
achieve the medium-term budgetary objective over the
pendent bodies. Significant differences between the
cycle.

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L 306/18
EN
Official Journal of the European Union
23.11.2011
The Council and the Commission, when assessing the
The excess expenditure growth over the medium-term
adjustment path toward the medium-term budgetary
reference shall not be counted as a breach of the
objective, shall examine if the Member State concerned
benchmark to the extent that it is fully offset by revenue
pursues an appropriate annual improvement of its
increases mandated by law.
cyclically-adjusted budget balance, net of one-off and
other temporary measures, required to meet its medium-
term budgetary objective, with 0,5 % of GDP as a
benchmark. For Member States faced with a debt level
The reference medium-term rate of potential GDP growth
exceeding 60 % of GDP or with pronounced risks of
shall be determined on the basis of forward-looking
overall debt sustainability, the Council and the
projections and backward-looking estimates. Projections
Commission shall examine whether the annual
shall be updated at regular intervals. The Commission
improvement of the cyclically-adjusted budget balance,
shall make public the calculation method for those
net of one-off and other temporary measures is higher
projections and the resulting reference medium-term rate
than 0,5 % of GDP. The Council and the Commission
of potential GDP growth.
shall take into account whether a higher adjustment
effort is made in economic good times, whereas the
effort might be more limited in economic bad times. In
particular, revenue windfalls and shortfalls shall be taken
When defining the adjustment path to the medium-term
into account.
budgetary objective for Member States that have not yet
reached this objective, and in allowing a temporary
deviation from this objective for Member States that
have already reached it, provided that an appropriate
Sufficient progress towards the medium-term budgetary
safety margin with respect to the deficit reference value
objective shall be evaluated on the basis of an overall
is preserved and that the budgetary position is expected to
assessment with the structural balance as the reference,
return to the medium-term budgetary objective within the
including an analysis of expenditure net of discretionary
programme period, the Council and the Commission shall
revenue measures. To this end, the Council and the
take into account the implementation of major structural
Commission shall assess whether the growth path of
reforms which have direct long-term positive budgetary
government expenditure, taken in conjunction with the
effects, including by raising potential sustainable growth,
effect of measures being taken or planned on the
and therefore a verifiable impact on the long-term sustain
revenue side, is in accordance with the following
ability of public finances.
conditions:
Particular attention shall be paid to pension reforms intro
(a) for Member States that have achieved their medium-
ducing a multi-pillar system that includes a mandatory,
term budgetary objective, annual expenditure growth
fully funded pillar. Member States implementing such
does not exceed a reference medium-term rate of
reforms shall be allowed to deviate from the adjustment
potential GDP growth, unless the excess is matched
path to their medium-term budgetary objective or from
by discretionary revenue measures;
the objective itself, with the deviation reflecting the
amount of the direct incremental impact of the reform
on the general government balance, provided that an
(b) for Member States that have not yet reached their
appropriate safety margin with respect to the deficit
medium-term budgetary objective, annual expenditure
reference value is preserved.
growth does not exceed a rate below a reference
medium-term rate of potential GDP growth, unless
the excess is matched by discretionary revenue
measures. The size of the shortfall of the growth rate
The Council and the Commission shall also examine
of government expenditure compared to a reference
whether the stability programme facilitates the
medium-term rate of potential GDP growth is set in
achievement of sustained and real convergence within
such a way as to ensure an appropriate adjustment
the euro area and the closer coordination of economic
towards the medium-term budgetary objective;
policies, and whether the economic policies of the
Member State concerned are consistent with the broad
economic policy guidelines and the employment guidelines
of the Member States and of the Union.
(c) for Member States that have not yet reached their
medium-term budgetary objective, discretionary
reductions of government revenue items are matched
either by expenditure reductions or by discretionary
In the case of an unusual event outside the control of the
increases in other government revenue items or both.
Member State concerned which has a major impact on the
financial position of the general government or in periods
of severe economic downturn for the euro area or the
Union as a whole, Member States may be allowed
The expenditure aggregate shall exclude interest expen
temporarily to depart from the adjustment path towards
diture, expenditure on Union programmes fully matched
the medium-term budgetary objective referred to in the
by Union funds revenue and non-discretionary changes in
third subparagraph, provided that this does not endanger
unemployment benefit expenditure.
fiscal sustainability in the medium term.

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EN
23.11.2011 Official
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the
European
Union L
306/19
2. The
Council
and
the
Commission
shall
examine
the
In the event that the Council does not adopt the decision
stability programme within at most 3 months of its
on the Commission recommendation that no effective
submission. The Council, on a recommendation from the
action has been taken, and failure to take appropriate
Commission and after consulting the Economic and
action on the part of the Member State concerned
Financial Committee, shall, if necessary, adopt an
persists, the Commission, after 1 month from its earlier
opinion on the programme. Where the Council, in
recommendation, shall recommend to the Council to
accordance with Article 121 TFEU, considers that the
adopt the decision establishing that no effective action
objectives and the content of the programme should be
has been taken. The decision shall be deemed to be
strengthened with particular reference to the adjustment
adopted by the Council unless it decides, by simple
path towards the medium-term budgetary objective, the
majority, to reject the recommendation within 10 days
Council shall in its opinion invite the Member State
of its adoption by the Commission. At the same time,
concerned to adjust its programme.’.
the Commission may recommend to the Council to
adopt a revised recommendation under Article 121(4)
(9) Article 6 is replaced by the following:
TFEU on necessary policy measures.
‘Article 6
When taking the decision on non-compliance referred to
1. As
part
of
multilateral
surveillance
in
accordance
in the fourth and fifth subparagraphs, only members of
with Article 121(3) TFEU, the Council and the
the Council representing participating Member States shall
Commission shall monitor the implementation of
vote and the Council shall act without taking into account
stability programmes, on the basis of information
the vote of the member of the Council representing the
provided by participating Member States and of
Member State concerned.
assessments by the Commission and the Economic and
Financial Committee, in particular with a view to iden
tifying actual or expected significant divergences of the
budgetary position from the medium-term budgetary
The Council shall submit a formal report to the European
objective, or from the appropriate adjustment path
Council on the decisions taken accordingly.
towards it.
2. In
the
event
of
a
significant
observed
deviation
from
3. A
deviation
from
the
medium-term
budgetary
the adjustment path towards the medium-term budgetary
objective or from the appropriate adjustment path
objective referred to in the third subparagraph of
towards it shall be evaluated on the basis of an overall
Article 5(1) of this Regulation, and in order to prevent
assessment with the structural balance as the reference,
the occurrence of an excessive deficit, the Commission
including an analysis of expenditure net of discretionary
shall address a warning to the Member State concerned
revenue measures, as defined in Article 5(1).
in accordance with Article 121(4) TFEU.
The Council shall, within 1 month of the date of adoption
of the warning referred to in the first subparagraph,
The assessment of whether the deviation is significant
examine the situation and adopt a recommendation for
shall, in particular, include the following criteria:
the necessary policy measures, on the basis of a
Commission recommendation, based on Article 121(4)
TFEU. The recommendation shall set a deadline of no
(a) for a Member State that has not reached the medium-
more than 5 months for addressing the deviation. The
term budgetary objective, when assessing the change in
deadline shall be reduced to 3 months if the Commission,
the structural balance, whether the deviation is at least
in its warning, considers that the situation is particularly
0,5 % of GDP in a single year or at least 0,25 % of
serious and warrants urgent action. The Council, on a
GDP on average per year in 2 consecutive years;
proposal from the Commission, shall make the recom
mendation public.
Within the deadline set by the Council in the recommen
(b) when assessing expenditure developments net of
dation under Article 121(4) TFEU, the Member State
discretionary revenue measures, whether the deviation
concerned shall report to the Council on action taken in
has a total impact on the government balance of at
response to the recommendation.
least 0,5 % of GDP in a single year or cumulatively in
2 consecutive years.
If the Member State concerned fails to take appropriate
action within the deadline specified in a Council recom
mendation under the second subparagraph, the
The deviation of expenditure developments shall not be
Commission shall immediately recommend to the
considered significant if the Member State concerned has
Council to adopt, by qualified majority, a decision estab
overachieved the medium-term budgetary objective, taking
lishing that no effective action has been taken. At the same
into account the possibility of significant revenue windfalls
time, the Commission may recommend to the Council to
and the budgetary plans laid out in the stability
adopt a revised recommendation under Article 121(4)
programme do not jeopardise that objective over the
TFEU on necessary policy measures.
programme period.

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L 306/20
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Official Journal of the European Union
23.11.2011
Similarly, the deviation may be left out of consideration
programme, comprising a cost-benefit analysis of
when it results from an unusual event outside the control
major structural reforms, which have direct long-
of the Member State concerned and which has a major
term positive budgetary effects, including by
impact on the financial position of the general government
raising potential sustainable growth;’;
or in case of severe economic downturn for the euro area
or the Union as a whole, provided that this does not
endanger fiscal sustainability in the medium-term.’.
(c) the following paragraph is inserted:
(10) Article 7 is amended as follows:
‘2a. The
convergence
programme
shall
be
based
on
the most likely macrofiscal scenario or on a more
(a) paragraph 1 is replaced by the following:
prudent scenario. The macroeconomic and budgetary
forecasts shall be compared with the most updated
‘1. Each non-participating Member State shall
Commission forecasts and, if appropriate, those of
submit to the Council and to the Commission
other independent bodies. Significant differences
information necessary for the purpose of multilateral
between the chosen macrofiscal scenario and the
surveillance at regular intervals under Article 121
Commission forecast shall be described with reasoning,
TFEU in the form of a convergence programme,
in particular if the level or growth of external
which provides an essential basis for the sustainability
assumptions departs significantly from the values
of public finances which is conducive to price stability,
retained in the Commission's forecasts.
strong sustainable growth and employment creation.’;
The exact nature of the information included in points
(b) in paragraph 2, points (a), (b) and (c) are replaced by
(a), (aa), (b), (c) and (d) of paragraph 2 shall be set out
the following:
in a harmonised framework established by the
Commission in cooperation with the Member States.’;
‘(a) the medium-term budgetary objective and the
adjustment path towards this objective for the
general government balance as a percentage of
(d) paragraph 3 is replaced by the following:
GDP, the expected path of the general
government debt ratio, the planned growth path
of government expenditure, including the corre
‘3. The information about the paths for the general
sponding allocation for gross fixed capital
government balance and debt ratio, the growth of
formation, in particular bearing in mind the
government expenditure, the planned growth path of
conditions and criteria to establish the expen
government revenue at unchanged policy, the planned
diture growth under Article 9(1), the planned
discretionary revenue measures, appropriately
growth path of government revenue at
quantified, and the main economic assumptions
unchanged policy and a quantification of the
referred to in points (a) and (b) of paragraph 2 shall
planned discretionary revenue measures, the
be on an annual basis and shall cover the preceding
medium-term monetary policy objectives, the
year, the current year and at least the following 3
relationship of those objectives to price and
years.
exchange rate stability and to the achievement
of sustained convergence;
4. Each
programme
shall
include
information
on
its
(aa) information on implicit liabilities related to
status in the context of national procedures, in
ageing, and contingent liabilities, such as public
particular whether the programme was presented to
guarantees, with a potentially large impact on the
the national parliament, and whether the national
general government accounts;
parliament had the opportunity to discuss the
Council opinion on the previous programme or, if
relevant, any recommendation or warning, and
(ab) information on the consistency of the
whether there has been parliamentary approval of
convergence programme with the broad
the programme.’.
economic policy guidelines and the national
reform programme;
(11) Article 8 is replaced by the following:
(b) the main assumptions about expected economic
developments and important economic variables
which are relevant to the achievement of the
‘Article 8
convergence programme, such as government
1. Convergence programmes shall be submitted
investment expenditure, real GDP growth,
annually in April, preferably by mid April and not later
employment and inflation;
than 30 April.
(c) a quantitative assessment of the budgetary and
other economic policy measures being taken or
2. Member
States
shall
make
public
their
convergence
proposed to achieve the objectives of the
programmes.’.

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EN
23.11.2011 Official
Journal
of
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European
Union L
306/21
(12) Article 9 is replaced by the following:
the excess is matched by discretionary revenue
measures. The size of the shortfall of the growth rate
of government expenditure compared to a reference
‘Article 9
medium-term rate of potential GDP growth is set in
such a way as to ensure an appropriate adjustment
1. Based
on
assessments
by
the
Commission
and
the
towards the medium-term budgetary objective;
Economic and Financial Committee, the Council shall,
within the framework of multilateral surveillance under
Article 121 TFEU, examine the medium-term budgetary
objectives presented by the Member States concerned in
(c) for Member States that have not yet reached their
their convergence programmes, assess whether the
medium-term budgetary objective, discretionary
economic assumptions on which the programme is
reductions of government revenue items are matched
based are plausible, whether the adjustment path towards
either by expenditure reductions or by discretionary
the medium-term budgetary objective is appropriate,
increases in other government revenue items or both.
including consideration of the accompanying path for
the debt ratio, and whether the measures being taken or
proposed to respect that adjustment path are sufficient to
achieve the medium-term budgetary objective over the
The expenditure aggregate shall exclude interest expen
cycle and to achieve sustained convergence.
diture, expenditure on Union programmes fully matched
by Union funds revenue and non-discretionary changes in
unemployment benefit expenditure.
The Council and the Commission, when assessing the
adjustment path toward the medium-term budgetary
objective, shall take into account whether a higher
The excess expenditure growth over the medium-term
adjustment effort is made in economic good times,
reference shall not be counted as a breach of the
whereas the effort might be more limited in economic
benchmark to the extent that it is fully offset by revenue
bad times. In particular, revenue windfalls and shortfalls
increases mandated by law.
shall be taken into account. For Member States faced with
a debt level exceeding 60 % of GDP or with pronounced
risks of overall debt sustainability, the Council and the
Commission shall examine whether the annual
The reference medium-term rate of potential GDP growth
improvement of the cyclically-adjusted budget balance,
shall be determined on the basis of forward-looking
net of one-off and other temporary measures, is higher
projections and backward-looking estimates. Projections
than 0,5 % of GDP. For Member States that are partici
shall be updated at regular intervals. The Commission
pating in ERM2, the Council and the Commission shall
shall make public the calculation method for those
examine if the Member State concerned pursues an appro
projections and the resulting reference medium-term rate
priate annual improvement of its cyclically adjusted
of potential GDP growth.
balance, net of one-off and other temporary measures,
required to meet its medium-term budgetary objective,
with 0,5 % of GDP as a benchmark.
When defining the adjustment path to the medium-term
budgetary objective for Member States that have not yet
reached this objective, and in allowing a temporary
Sufficient progress towards the medium-term budgetary
deviation from this objective for Member States that
objective shall be evaluated on the basis of an overall
have already reached it, provided that an appropriate
assessment with the structural balance as the reference,
safety margin with respect to the deficit reference value
including an analysis of expenditure net of discretionary
is preserved and that the budgetary position is expected to
revenue measures. To this end, the Council and the
return to the medium-term budgetary objective within the
Commission shall assess whether the growth path of
programme period, the Council and the Commission shall
government expenditure, taken in conjunction with the
take into account the implementation of major structural
effect of measures being taken or planned on the
reforms which have direct long-term positive budgetary
revenue side, is in accordance with the following
effects, including by raising potential sustainable growth,
conditions:
and therefore a verifiable impact on the long-term sustain
ability of public finances.
(a) for Member States that have achieved their medium-
term budgetary objective, annual expenditure growth
Particular attention shall be paid to pension reforms intro
does not exceed a reference medium-term rate of
ducing a multi-pillar system that includes a mandatory,
potential GDP growth, unless the excess is matched
fully funded pillar. Member States implementing such
by discretionary revenue measures;
reforms shall be allowed to deviate from the adjustment
path to their medium-term budgetary objective or from
the objective itself, with the deviation reflecting the
(b) for Member States that have not yet reached their
amount of the direct incremental impact of the reform
medium-term budgetary objective, annual expenditure
on the general government balance, provided that an
growth does not exceed a rate below a reference
appropriate safety margin with respect to the deficit
medium-term rate of potential GDP growth, unless
reference value is preserved.

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L 306/22
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Official Journal of the European Union
23.11.2011
The Council and the Commission shall also examine
shall address a warning to the Member State concerned in
whether the convergence programme facilitates the
accordance with Article 121(4) TFEU.
achievement of sustained and real convergence and the
closer coordination of economic policies, and whether
the economic policies of the Member State concerned
The Council shall, within 1 month of the date of adoption
are consistent with the broad economic policy guidelines
of the warning referred to in the first subparagraph,
and the employment guidelines of the Member States and
examine the situation and adopt a recommendation for
of the Union. In addition, for Member States that are
the necessary policy measures, on the basis of a
participating in ERM2, the Council shall examine
Commission recommendation, based on Article 121(4)
whether the convergence programme ensures a smooth
TFEU. The recommendation shall set a deadline of no
participation in the exchange rate mechanism.
more than 5 months for addressing the deviation. The
deadline shall be reduced to 3 months if the Commission,
in its warning, considers that the situation is particularly
In the case of an unusual event outside the control of the
serious and warrants urgent action. The Council, on a
Member State concerned, which has a major impact on the
proposal from the Commission, shall make the recom
financial position of the general government or in periods
mendation public.
of severe economic downturn for the euro area or the
Union as a whole, Member States may be allowed
temporarily to depart from the adjustment path towards
Within the deadline set by the Council in the recommen
the medium-term budgetary objective referred to in the
dation under Article 121(4) TFEU, the Member State
third subparagraph, provided that this does not endanger
concerned shall report to the Council on action taken in
fiscal sustainability in the medium term.
response to the recommendation.
2. The
Council
and
the
Commission
shall
examine
the
convergence programme within at most 3 months of its
If the Member State concerned fails to take appropriate
submission. The Council, on a recommendation from the
action within the deadline specified in a Council recom
Commission and after consulting the Economic and
mendation under the second subparagraph, the
Financial Committee, shall, if necessary, adopt an
Commission shall immediately recommend to the
opinion on the programme. Where the Council, in
Council to adopt, by qualified majority, a decision estab
accordance with Article 121 TFEU, considers that the
lishing that no effective action has been taken. At the same
objectives and the content of the programme should be
time, the Commission may recommend to the Council to
strengthened with particular reference to the adjustment
adopt a revised recommendation under Article 121(4)
path towards the medium-term budgetary objective, the
TFEU on necessary policy measures.
Council shall in its opinion invite the Member State
concerned to adjust its programme.’.
In the event that the Council does not adopt the decision
on the Commission recommendation that no effective
(13) Article 10 is replaced by the following:
action has been taken, and failure to take appropriate
action on the part of the Member State concerned
‘Article 10
persists, the Commission, after 1 month from its earlier
recommendation, shall recommend to the Council to
1. As
part
of
multilateral
surveillance
in
accordance
adopt the decision establishing that no effective action
with Article 121(3) TFEU, the Council and the
has been taken. The decision shall be deemed to be
Commission shall monitor the implementation of
adopted by the Council unless it decides, by simple
convergence programmes, on the basis of information
majority, to reject the recommendation within 10 days
provided by Member States with a derogation and of
of its adoption by the Commission. At the same time,
assessments by the Commission and the Economic and
the Commission may recommend to the Council to
Financial Committee, in particular with a view to iden
adopt a revised recommendation under Article 121(4)
tifying actual or expected significant divergences of the
TFEU on necessary policy measures.
budgetary position from the medium-term budgetary
objective, or from the appropriate adjustment path
towards it.
When taking the decision on non-compliance referred to
in the fourth and fifth subparagraphs, the Council shall act
In addition, the Council and the Commission shall
without taking into account the vote of the member of the
monitor the economic policies of non-participating
Council representing the Member State concerned.
Member States in the light of convergence programme
objectives with a view to ensure that their policies are
geared to stability and thus to avoid real exchange rate
The Council shall submit a formal report to the European
misalignments and excessive nominal exchange rate fluc
Council on the decisions taken accordingly.
tuations.
3. A
deviation
from
the
medium-term
budgetary
2. In
the
event
of
a
significant
observed
deviation
from
objective or from the appropriate adjustment path
the adjustment path towards the medium-term budgetary
towards it shall be evaluated on the basis of an overall
objective referred to in the third subparagraph of
assessment with the structural balance as the reference,
Article 9(1) of this Regulation, and in order to prevent
including an analysis of expenditure net of discretionary
the occurrence of an excessive deficit, the Commission
revenue measures, as defined in Article 9(1).

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23.11.2011 Official
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European
Union L
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The assessment of whether the deviation is significant
(c) the date of publication of key statistical information
shall, in particular, include the following criteria:
which must be designated significantly in advance.
___________
(*) OJ L 87, 31.3.2009, p. 164.’.
(a) for a Member State that has not reached the medium-
term budgetary objective, when assessing the change in
the structural balance, whether the deviation is at least
0,5 % of GDP in a single year or at least 0,25 % of
(15) The following Article is inserted:
GDP on average per year in two consecutive years;
‘Article -11
1. The
Commission
shall
ensure
a
permanent
dialogue
(b) when assessing expenditure developments net of
with the relevant authorities of the Member States in
discretionary revenue measures, whether the deviation
accordance with the objectives of this Regulation. To
has a total impact on the government balance of at
that end, the Commission shall, in particular, carry out
least 0,5 % of GDP in a single year or cumulatively in
missions for the purpose of the assessment of the
two consecutive years.
economic situation in the Member State and the identifi
cation of any risks or difficulties in complying with the
objectives of this Regulation.
The deviation of expenditure developments shall not be
considered significant if the Member State concerned has
2. The Commission may undertake enhanced
overachieved the medium-term budgetary objective, taking
surveillance missions in Member States which are the
into account the possibility of significant revenue windfalls
subject of recommendations issued under Article 6(2) or
and the budgetary plans laid out in the convergence
Article 10(2) for the purposes of on-site monitoring. The
programme do not jeopardise that objective over the
Member States concerned shall provide all necessary
programme period.
information for the preparation and the conduct of
those missions.
Similarly, the deviation may be left out of consideration
3. When
the
Member
State
concerned
is
a
participating
when resulting from an unusual event outside the control
Member State or a Member State that is participating in
of the Member State concerned and which has a major
ERM2, the Commission may invite representatives of the
impact on the financial position of the general government
European Central Bank, if appropriate, to participate in
or in case of severe economic downturn for the euro area
surveillance missions.
or the Union as a whole, on the condition that this does
not endanger fiscal sustainability in the medium term.’.
4. The
Commission
shall
report
to
the
Council
on
the
outcome of the missions referred to in paragraph 2 and, if
appropriate, may decide to make its findings public.
(14) The following section is inserted:
5. When organising the
missions referred
to in
paragraph 2, the Commission shall transmit its provisional
‘SECTION 3A
findings to the Member States concerned for comments.’.
PRINCIPLE OF STATISTICAL INDEPENDENCE
(16) The following Article is inserted:
Article 10a
With a view to ensuring that the multilateral surveillance is
‘Article 12a
based on sound and independent statistics, Member States
shall ensure the professional independence of national stat
1. By
14
December
2014
and
every
5
years
thereafter,
istical authorities, which shall be consistent with the
the Commission shall publish a report on the application
European statistics code of practice as laid down in Regu
of this Regulation.
lation (EC) No 223/2009 of the European Parliament and
of the Council of 11 March 2009 on European
That report shall evaluate, inter alia:
Statistics (*). As a minimum this shall require:
(a) the effectiveness of this Regulation, particularly
whether the provisions governing decision-making
(a) transparent recruitment and dismissal processes which
have proved sufficiently robust;
must be solely based on professional criteria;
(b) the progress in ensuring closer coordination of
economic policies and sustained convergence of
(b) budgetary allocations which must be made on an
economic performances of the Member States in
annual or a multiannual basis;
accordance with the TFEU.

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Official Journal of the European Union
23.11.2011
2. Where
appropriate,
this
report
shall
be
accompanied (17) All references to ‘Article 99 of the Treaty’ shall be replaced
by a proposal for amendments to this Regulation,
throughout the Regulation by references to ‘Article 121
including to the decision-making procedures.
TFEU’.
Article 2
3. The report shall be forwarded to the European
This Regulation shall enter into force on the 20th day following
Parliament and the Council.’.
its publication in the Official Journal of the European Union.
This Regulation shall be binding in its entirety and directly applicable in all Member States.
Done at Strasbourg, 16 November 2011.
For the European Parliament
For the Council
The President
The President
J. BUZEK
W. SZCZUKA

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