WRITTEN QUESTION E-1311/98 by José García-Margallo y Marfil (PPE) to the Commission (29 April 1998)

Subject: EURO 1999

As a result of the Pact for Stability and Growth adopted by the Amsterdam European Council in June 1997, the Member States' medium-term budgetary objective will be to achieve 'positions close to balance or in surplus'. If the Member States continue their budgetary adjustments in subsequent years, their public finances will be in the best position to tackle the budgetary consequences of a possible downturn in the economy.

But what does the Commission think would be the current situation in Austria if the Stability Pact had been applied during the period 1992-1997?

Answer given by Mr de Silguy on behalf of the Commission (2 June 1998)

The stability and growth pact is constituted by a resolution of the European Council of 7 June 1997 ((OJ C 236, 2.8.1997. )), Council Regulation (EC) No 1466/97 of 7 July 1997 on the strengthening of the surveillance of budgetary positions and the surveillance and coordination of economic policies ((OJ L 209, 2.8.1997. )), and Council Regulation (EC) No 1467 of 7 July 1997 on speeding up and clarifying the implementation of the excessive deficit procedure (2). The pact aims at fiscal discipline in the economic and monetary union (EMU) thus creating the appropriate stability conditions for sustained growth. It provides a powerful system of incentives for a Member State not to incur an excessive deficit and to correct it rapidly if such a situation should occur.

In 1992, Austria had a government deficit equal to 2% of gross domestic product (GDP), and in 1993 the deficit was 4.2% of GDP. After Austria's accession to the Community in January 1995, the Council decided 10 July 1995 that an excessive deficit existed in Austria (Article 104c(6) of the EC Treaty). In the period covered by the Honourable Member's question, i.e. 1992 to 1997, Austria budgetary policy was mainly geared towards convergence, i.e. to correct the excessive deficit situation and thus to meet the convergence criteria on the budgetary position. Moreover, paragraphs 9 and 11 of Article 104c, which deal with sanctions, did not apply during stage two of EMU.