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Excessive deficit procedure (EDP)

The aim of the excessive deficit procedure (EDP) is that EU countries correct excessive deficit and/or debt levels. The European Commission can launch an EDP against an EU country not respecting the Stability and Growth Pact (SGP), a body of rules governing the coordination of EU countries’ fiscal policies.

In particular, the EDP can be launched if an EU country:

  • having breached or being in risk of breaching the deficit threshold of 3% of GDP; or
  • having violated the debt rule by having a government debt level above 60% of GDP, which is not diminishing at a satisfactory pace — this means that the gap between a country's debt level and the 60% reference needs to be reduced by one 20th annually (on average over 3 years).

The SGP aims to safeguard sound public finances and has two arms:

  • a preventive arm, which ensures EU countries’ fiscal policy is conducted in a sustainable manner;
  • a corrective arm, which lays down how countries should take action in the event their public debt or budget deficit is considered excessive.

The EDP is governed by Article 126 of the Treaty on the Functioning of the European Union and underpins the corrective arm of the EU’s SGP.

Every April, euro-area countries submit stability programmes to the Commission and to the Council, while non-euro-area countries submit convergence programmes to the same institutions. A stability or convergence programme must include the country’s medium-term budgetary objective as well as information as to how this will be achieved. It also contains an analysis of the effects of changes in the main underlying economic assumptions on the country’s fiscal position.

The programmes are examined by the Commission. If the criteria are not met, an EDP is launched by the Council based on recommendations by the Commission.

The EDP requires the country in question to provide a plan of the corrective action and policies it will follow, as well as deadlines for their achievement. Euro-area countries that do not follow up on the recommendations may be fined.