TEXT PROPOSED BY THE COMMISSION

AMENDMENT

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1.   This Regulation sets out provisions for strengthening the economic and budgetary surveillance of Member States experiencing or threatened with serious difficulties with respect to their financial stability and/or that receive or may receive financial assistance from one or several other States, the European Financial Stability Facility (EFSF), the European Financial Stability Mechanism (EFSM), the European Stability Mechanism (ESM) or other International Financial Institutions (IFI), such as the International Monetary Fund (IMF).

1.   This Regulation sets out provisions for strengthening the economic and budgetary surveillance of Member States whose currency is the euro and which:

1a.     This Regulation sets out provisions for enhanced national budgetary rules and economic policy coordination.

2a.     In applying this Regulation, the Commission, the Council and the Member States shall fully observe Article 152 TFEU and the recommendations adopted under this Regulation shall respect national practices and institutions for wage formation. In applying this Regulation and the recommendations adopted hereunder, the Commission, the Council and the Member States shall take into account Article 28 of the Charter of Fundamental Rights of the European Union, and, accordingly, their application does not affect the right to negotiate, conclude and enforce collective agreements and to take collective action in accordance with national law and practices.

Article 1a

Enhanced budgetary rules and economic coordination

1.     With a view to coordinating better the planning of their national debt issuance, Member States shall report in advance on their public debt issuance plans to the Commission and to the Council.

2.     With a view to benchmarking best practices and working towards a more closely coordinated economic policy, Member States shall ensure that all major economic policy reforms that they plan to undertake are discussed in advance and, where appropriate, shall coordinate those reforms with the other Member States.

3.     In accordance with Regulation (EC) No 1466/97, Member States shall ensure that the budgetary position of the general government is balanced or in surplus over the medium term.

1.   The Commission may decide to make a Member State experiencing severe difficulties with regard to its financial stability subject to enhanced surveillance. The Member State concerned shall be given the possibility to express its views beforehand . The Commission shall decide every six months whether to prolong the enhanced surveillance.

1.    On the basis of the latest in-depth review in accordance with Article 5 of Regulation (EU) No 1176/2011, and taking into account additional objective criteria, including warnings by the European Systemic Risk Board (ESRB), as well as the reports referred to in Regulation (EU) No …/2012 of the European Parliament and of the Council of … [on common provisions for monitoring and assessing draft budgetary plans and ensuring the correction of excessive deficit of the Member States in the euro area], the Commission may decide to make a Member State subject to enhanced surveillance. The Council may, within 10 days of such a decision, repeal it by qualified majority. The Member State concerned shall be given the possibility to express its views before the decision is taken . The Commission shall decide every six months whether to prolong the enhanced surveillance.

1a.     Where the Commission decides to make a Member State subject to enhanced surveillance under paragraph 1, it shall duly notify the ESRB and, where relevant, inform the Member State of the results of the enhanced surveillance.

2.   The Commission shall decide to make a Member State receiving a financial assistance on a precautionary basis from one or several other States, the EFSF, the ESM or any other International Financial Institution, such as the IMF, subject to enhanced surveillance. The Commission shall establish a list of the precautionary financial assistance instruments concerned and keep it updated to take into account possible changes in the financial support policy of the EFSF, ESM or of any other relevant International Financial Institution .

2.   The Commission shall decide to make a Member State requesting or receiving a financial assistance on a precautionary basis from one or several other States, the EFSF, the EFSM, the ESM or any other international financial institution such as the IMF, subject to enhanced surveillance.

The Commission shall make public its decisions taken in accordance with paragraphs 1 and 2.

3.   Paragraph 2 shall not apply to a Member State receiving a financial assistance on a precautionary basis in the form of a credit line which is not conditioned to the adoption of new policy measures by the concerned Member State, as long as the credit line is not drawn.

3.    The Commission may decide that paragraph 2 shall not apply to a Member State receiving a financial assistance on a precautionary basis in the form of a credit line which is not conditioned to the adoption of new policy measures by the concerned Member State, as long as the credit line is not drawn.

3a.     The Commission shall establish a list of the financial assistance instruments which can trigger the enhanced surveillance under paragraph 2 and shall keep that list updated.

1.   A Member State under enhanced surveillance shall, in consultation and cooperation with the Commission, acting in liaison with the European Central Bank (ECB), adopt measures aimed at addressing the sources or potential sources of difficulties.

1.   A Member State subject to enhanced surveillance shall, in consultation and cooperation with the Commission, acting in liaison with the European Central Bank (ECB), the European Supervisory Authority (European Banking Authority) established by Regulation (EU) No 1093/2010 of the European Parliament and of the Council (3), the European Supervisory Authority (European Insurance and Occupational Pensions Authority) established by Regulation (EU) No 1094/2010 of the European Parliament and of the Council (4) and the European Supervisory Authority (European Securities and Markets Authority) established by Regulation (EU) No 1095/2010 of the European Parliament and of the Council (5) (collectively referred to as 'the ESAs'), the ESRB and, where appropriate, the IMF, adopt measures aimed at addressing the sources or potential sources of difficulties , taking into account any recommendations addressed to them under Regulations (EC) No 1466/97, (EC) 1467/97 or (EU) 1176/2011 concerning their national reform programmes and their stability or convergence programmes . The Eurogroup Working Group, the EFC, the relevant committee of the European Parliament and the parliament of the Member State concerned shall be informed of those measures .

1a.     The Commission shall examine potential negative spill-over effects generated by other Member States including in the field of taxation. Where the Commission has identified such negative spill-over effects, the Council, on a recommendation from the Commission, shall address, in accordance with the procedure laid down in Article 121(2) TFEU the necessary recommendations to the Member States generating the negative spill-over effects.

3.   On a request from the Commission, the Member State under enhanced surveillance shall:

3.   On a request from the Commission, a Member State under enhanced surveillance pursuant to Article 2(1) shall:

3a.     On a request from the Commission, a Member State under enhanced surveillance pursuant to Article 2(2) shall:

Member States receiving financial support for the recapitalisation of their financial institutions shall, in addition, report on the conditions imposed on those financial institutions, including as regards executive remuneration and credit conditions applicable in the real economy.

4.   The Commission shall conduct, in liaison with the ECB, regular review missions in the Member State under surveillance to verify the progresses made in the implementation of the measures mentioned in paragraph 1, 2 and 3 . It shall communicate every quarter its findings to the Economic and Financial Committee (EFC) - or to any subcommittee the latter may designate for that purpose - and assess notably whether further measures are needed. These review missions shall replace the onsite monitoring foreseen in Article 10a(2) of Regulation (EC) No 1467/97.

4.   The Commission shall conduct, in liaison with the ECB and the relevant ESAs and, where appropriate, the IMF , regular review missions in the Member State under enhanced surveillance to verify the progresses made in the implementation of the measures mentioned in paragraphs 1, 2, 3 and 3a . It shall communicate every quarter its findings to the EFC and to the competent committee of the European Parliament and assess, in particular, whether further measures are needed. These review missions shall replace the on-site monitoring provided for in Article 10a(2) of Regulation (EC) No 1467/97.

5.   Where it is concluded - on the basis of the assessment foreseen in paragraph 4 - that further measures are needed and the financial situation of the Member State concerned has significant adverse effects on the financial stability of the euro area, the Council, acting by qualified majority on a proposal from the Commission, may recommend to the Member State concerned to seek financial assistance and to prepare a macro-economic adjustment programme. The Council may decide to make this recommendation public.

5.   Where it is assessed - on the basis of the review missions provided for in paragraph 4 - that further measures are needed and the financial and economic situation of the Member State concerned presents a risk to the financial stability or the smooth functioning of the euro area, the Council, acting by qualified majority on a proposal from the Commission, may simultaneously:

The Council may decide to make its recommendations public.

Where a Member State seeks financial assistance from the ESM pursuant to paragraph 3a, the other Member States shall use their best efforts to ensure that the ESM provide assistance to that Member State, and that it do so in a timely manner.

6a.     During the whole process, the competent committee of the European Parliament and the parliament of the Member State concerned may invite representatives of the IMF, the ECB and the Commission to participate in an economic dialogue on significant issues in relation to the proper functioning of the economy.

A Member State wishing to obtain financial assistance from one or several other States, the EFSF, the ESM, the International Monetary Fund (IMF) or another institution outside of the Union framework shall immediately inform the Council, the Commission and the ECB of its intention. The EFC , or any subcommittee the latter may designate for that purpose, shall hold a discussion on this envisaged request, after having received an assessment from the Commission.

A Member State intending to request financial assistance from one or several other Member States, the EFSF, the ESM, the IMF or another institution outside of the Union framework shall immediately inform the European Parliament, the Council, the Commission and the ECB of its intention. The EFC shall hold a discussion on this envisaged request, after having received an assessment from the Commission with a view to examining, inter alia, the possibilities available under existing Union or euro area financial instruments before the Member State concerned addresses potential lenders .

Where financial assistance is sought from the EFSF or the ESM, the Commission shall prepare – in liaison with the ECB and wherever possible, the IMF - an analysis of the sustainability of the government debt of the Member State concerned, including the Member State's ability to repay the envisaged financial assistance, and forward it to the EFC or to any subcommittee the latter may designate for that purpose .

Where financial assistance is sought from the EFSF , the EFSM or the ESM, the Commission shall prepare – in liaison with the ECB and wherever possible and appropriate, with the IMF - an analysis of the sustainability of the government debt and the actual or potential financing needs of the Member State concerned, including the impact of any macro-prudential adjustment programme on the Member State's ability to repay the envisaged financial assistance, and send it to the EFC.

The assessment of the sustainability of the government debt shall be based on prudent macroeconomic and budgetary forecasts using the most up-to-date information and taking proper account of the outcome of the report referred to in point (a) of Article 3(3) as well as any supervisory task exercised according to point (b) of Article 3(3). The forecasts shall assess the impact of macroeconomic and financial shocks and adverse developments on the sustainability of government debt.

The Commission shall make public the methodology, the economic and econometric underlying models and assumptions, including an estimation of the potential output and macroeconomic multiplier effects as well as any other relevant parameter underpinning the assessment of the sustainability of the government debt.

1.   A Member State receiving financial assistance from one or several other States, the IMF, the EFSF or the ESM shall prepare in agreement with the Commission - acting in liaison with the ECB - a draft adjustment programme aimed at re-establishing a sound and sustainable economic and financial situation and restoring its capacity to finance itself fully on the financial markets. The draft adjustment programme shall take due account of the current recommendations addressed to the Member State concerned under Articles 121, 126 and/or 148 of the Treaty- and its actions to comply with them - while aiming at broadening, strengthening and deepening the required policy measures.

1.   A Member State requesting or receiving financial assistance from one or several other States, the IMF, the EFSF, the EFSM or the ESM shall prepare in agreement with the Commission - acting in liaison with the ECB and, where appropriate, with the IMF - a draft macroeconomic adjustment programme which shall build on and substitute any economic partnership programmes under Regulation (EU) No …/2012 [on common provisions for monitoring and assessing draft budgetary plans and ensuring the correction of excessive deficit of the Member States in the euro area], which shall also include annual budgetary target. The draft macroeconomic adjustment programme shall addresses the specific risks emanating from that Member State for the financial stability of the euro area and shall aim at rapidly re-establishing a sound and sustainable economic and financial situation and restoring its capacity to finance itself fully on the financial markets. The draft macroeconomic adjustment programme shall be based on the assessment of the sustainability of the government debt and shall take due account of the recommendations addressed to the Member State concerned under Articles 121, 126, 136 and/or 148 TFEU - and its actions to comply with them - while aiming at broadening, strengthening and deepening the required policy measures. The draft macroeconomic adjustment programme shall respect the practices and institutions for wage formation and industrial relations in the Union and shall, where possible, take into account the national reform programme of the Member State concerned in the context of the Union strategy for growth and jobs. The draft macroeconomic adjustment programme shall fully observe Article 151 TFEU and Article 28 of the Charter of Fundamental Rights of the European Union.

1a.     A Member State preparing a draft macroeconomic adjustment programme under paragraph 1 shall establish, in agreement with the Commission, an updated partnership programme aiming at creating the necessary conditions for achieving sustainable public finances.

2.    The Council, acting by qualified majority on a proposal from the Commission , shall approve the adjustment programme.

2.   The Commission shall assess the draft macroeconomic adjustment programme within one week of submission of that programme .

If the Commission considers the draft macroeconomic adjustment programme to be sufficient, it shall approve it. The Council may, within 10 days of that decision, repeal it by qualified majority.

If the Commission considers the actions or the timetable envisaged in the draft macroeconomic adjustment programme to be insufficient, it shall adopt a recommendation addressed to the Member State to submit, within one week, a new draft macroeconomic adjustment programme, while stating the reasons why the original programme is insufficient. The draft macroeconomic adjustment programme shall, except in case of urgency, be the basis of any Memorandum of Understanding, programme or technical agreement concluded with relevant parties providing financial assistance. Consistency between the different relevant documents relating to the financial assistance and the updated versions of the draft macroeconomic adjustment programme as well as consistency with the broad economic and employment policy guidelines shall be duly justified. The Council may, within 10 days of the Commission's decision, repeal it by qualified majority.

2a.     The Commission and the Council shall monitor the implementation of the adjustment programme and the annual budgetary plans consistent with it.

There shall be consistency in the process of economic and fiscal surveillance with respect to a Member State whose currency is the euro under macroeconomic adjustment programme to avoid a duplication of reporting obligations.

3.   The Commission, in liaison with the ECB, shall monitor the progress made in the implementation of the adjustment programme and inform every three months the EFC or any subcommittee the latter may designate for that purpose . The Member State concerned shall give the Commission its full cooperation. It shall in particular provide to the Commission all the information that the latter deems necessary for the monitoring of the programme. Article 3(3) shall apply.

3.   The Commission, in liaison with the ECB, shall monitor the progress made in the implementation of the adjustment programme and inform every three months the EFC. The Member State concerned shall give the Commission and the ECB its full cooperation. It shall in particular provide to the Commission and the ECB all the information that the latter deems necessary for the monitoring of the programme. Article 3(3) shall apply. In the case of insufficient cooperation, the Council, on a proposal from the Commission, may address a public recommendation to the Member State concerned laying down the action to be taken by that Member State.

4.   The Commission - in liaison with the ECB - shall examine with the Member State concerned the changes that may be needed to its adjustment programme. The Council, acting by a qualified majority on a proposal from the Commission, shall decide on any change to be made to the adjustment programme.

4.   The Commission - in liaison with the ECB and, where appropriate, with the IMF - shall examine with the Member State concerned the changes and updates that may be needed to its adjustment programme in order to take proper account of inter alia any significant gap between macroeconomic forecasts and realised figures, including possible consequences resulting from the adjustment programme, negative spill-over effects as well as macroeconomic and financial shocks . The Commission shall decide on any changes made to the macroeconomic adjustment programme. The Council may, within 10 days of that decision, repeal it by qualified majority.

4a.     The Member State concerned shall, in close cooperation with the Commission, take all necessary measures to encourage private investors to maintain their overall exposure on a voluntary basis.

5.   If the monitoring referred to in paragraph 3 highlights significant deviations from the macro-economic adjustment programme, the Council, acting by qualified majority on a proposal from the Commission, may decide that the Member State concerned does not comply with the policy requirements contained in the adjustment programme.

5.   If the monitoring referred to in paragraph 3 highlights significant deviations from the macroeconomic adjustment programme, the Commission may decide that the Member State concerned does not comply with the policy requirements contained in the adjustment programme. In its decision, the Commission shall explicitly take account of whether significant deviation is due to reasons that are not within the control of the Member State concerned. The Council may, within 10 days of adoption of such a decision, repeal it by qualified majority. The Commission decision shall state the reasons of non-compliance and the necessity for and proportionality of the changes made to the macroeconomic adjustment programme referred to in paragraph 4.

The macroeconomic adjustment programme shall, in particular, outline precautionary measures and contingency plans to be adopted in case of unforeseen developments such as exogenous shocks.

The fiscal consolidation efforts set out in the macroeconomic adjustment programme shall take into account the needs to ensure sufficient means for fundamental policies such as education and health care.

Where the Commission takes a decision under the first subparagraph, the Member State concerned shall, in close cooperation with the Commission and in liaison with the ECB, take measures aimed at avoiding market turmoil and preserving the good functioning of its financial sector.

6.   A Member State subject to an adjustment programme experiencing insufficient administrative capacity or significant problems in the implementation of its adjustment programme shall seek technical assistance from the Commission.

6.   A Member State subject to a macroeconomic adjustment programme experiencing insufficient administrative capacity or significant problems in the implementation of its adjustment programme shall seek technical assistance from the Commission , which may constitute for this purpose groups of experts with Member States and other Union and/or relevant international institutions . The objectives and the means of the technical assistance shall be explicitly outlined in the updated versions of the macroeconomic adjustment programme. Furthermore, national ownership of the implementation process of technical assistance shall be ensured. Technical assistance shall be focused on areas such as: improving public procurement, promoting competition, tackling corruption and increasing the efficiency of collecting tax revenues to promote financial sustainability.

The macroeconomic adjustment programme and an assessment of the social consequences shall be made public.

The assessment of the sustainability of the government debt shall be annexed to the macroeconomic adjustment programme.

6a.     A Member State subject to a macroeconomic adjustment programme shall carry out a comprehensive audit of its outstanding stock of debt in order inter alia to assess the reasons having led to the building up of excessive levels of debt as well as any irregularity involved in the debt issuance process.

7.   The relevant Committee of the European Parliament may invite representatives of the Member State concerned to participate to an exchange of views on the progress made in the implementation of the adjustment programme.

7.   The competent committee of the European Parliament may offer the opportunity to the Member State concerned and to the Commission to participate to an exchange of views on the progress made in the implementation of the adjustment programme.

8a.     This Article does not apply to financial assistance granted on a precautionary basis or to loans made for the recapitalisation of financial institutions.

Article 6a

Involvement of social partners and civil society

Organisations representing the social partners as well as civil society organisations shall be given the opportunity to express their views on the Commission public recommendations and opinions provided for in this Regulation and on Member States reports and draft reports provided for in Articles 2 to 7 of this Regulation. These views shall be made public.

Article 6b

Measures to safeguard tax revenue

1.     The Member State concerned shall, in accordance with Article 65 TFEU, in close cooperation with the Commission and in liaison with the ECB, take measures aimed at preventing infringements of national law and regulations in particular in the field of taxation.

2.     The Member State concerned shall request the Commission to make a proposal to the Council, in accordance with Article 66 TFEU, to take safeguard measures regarding movements of capital to or from third countries causing, or threatening to cause, serious difficulties for the operation of the economic and monetary union. The Commission shall consult the ECB before making any such proposal.

1.   The adjustment programme and the changes thereto provided for by Article 6 of this Regulation shall be deemed to replace the submission of stability programmes provided for by Article 4 of Council Regulation (EC) No 1466/97.

1.   The macroeconomic adjustment programme and the changes thereto provided for by Article 6 of this Regulation shall replace the submission of stability programmes provided for by Article 4 of Council Regulation (EC) No 1466/97.

The implementation of Regulation (EU) No XXX on the prevention and correction of macroeconomic imbalances shall be suspended for the Member States subject to a macro-economic adjustment programme approved by the Council in accordance with Article 6(2) of this Regulation. This suspension shall be applicable for the duration of the macro-economic adjustment programme.

The implementation of Regulation (EU) No 1176/2011 on the prevention and correction of macroeconomic imbalances shall be suspended for the Member States subject to a macroeconomic adjustment programme approved by the Council in accordance with Article 6(2) of this Regulation with the exception of the measures provided for in Articles 3, 4 and 5 of Regulation (EU) No 1176/2011 relating to the scoreboard of macroeconomic and macro-financial indicators, the alert mechanism and the in-depth review . This suspension shall be applicable for the duration of the macroeconomic adjustment programme.

The monitoring provided for by Article 6(3) of this Regulation shall be deemed to replace the monitoring and assessment of the European Semester for economic policy coordination provided for by Article 2a of Regulation (EC) No 1466/97 on the strengthening of the surveillance of budgetary positions and coordination of economic policies.

The monitoring provided for by Article 6(3) of this Regulation shall replace the monitoring and assessment of the European Semester for economic policy coordination provided for by Article 2a of Regulation (EC) No 1466/97 on the strengthening of the surveillance of budgetary positions and coordination of economic policies. The suspension shall be applicable for the duration of the macroeconomic adjustment programme.

The implementation of Regulation (EU) No XXX on common provisions for monitoring and assessing draft budgetary plans and ensuring the correction of excessive deficit of the Member States in the euro area shall be suspended for the Member States subject to a macro-economic adjustment programme approved by the Council in accordance with Article 6(2) of this Regulation. This suspension shall be applicable for the duration of the macro-economic adjustment programme.

The implementation of Regulation (EU) No XXX on common provisions for monitoring and assessing draft budgetary plans and ensuring the correction of excessive deficit of the Member States in the euro area shall be suspended for the Member States subject to a macroeconomic adjustment programme approved by the Council in accordance with Article 6(2) of this Regulation with the exception of Articles 1 to 4 of Regulation (EU) No …/2012 . This suspension shall be applicable for the duration of the macroeconomic adjustment programme.

Article 10a

Placement of a Member State under legal protection

1.     Where the measures provided for in Article 3(5) do not restore the financial situation of the Member State and where that Member State is at risk of enduring state of default or suspension of payments, the Commission may, after consulting the Council, adopt a decision placing the Member State under legal protection. The Council may, within 10 days of adoption of such a decision, repeal it by simple majority.

2.     The aim of this Article is to allow the Member State concerned to stabilise its economic situation and to be able to honour its debt.

A decision placing a Member State under legal protection shall have the following effects:

3.     This Article shall apply from 2017.

1.   A Member State shall be under post-programme surveillance as long as a minimum of 75 % of the financial assistance received from one or several other Member State(s), the EFSM, the EFSF or the ESM has not been repaid. The Council, acting on a qualified majority on a proposal from the Commission , may extend the duration of the post programme surveillance.

1.   A Member State shall be under post-programme surveillance as long as a minimum of 75 % of the financial assistance received from one or several other Member State(s), the EFSM, the EFSF or the ESM has not been repaid. The Commission may decide to extend the duration of the post-programme surveillance. The Council may, within 10 days of such a decision, repeal it by qualified majority.

3.   The Commission shall conduct, in liaison with the ECB, regular review missions in the Member State under post programme surveillance to assess its economic, fiscal and financial situation. It shall communicate every semester its findings to the EFC or to any subcommittee the latter may designate for that purpose and assess notably whether corrective measures are needed.

3.   The Commission shall conduct, in liaison with the ECB, regular review missions in the Member State under post-programme surveillance to assess its economic, fiscal and financial situation. It shall communicate every semester its findings to the competent committee of the European Parliament, to the EFC or to any subcommittee the latter may designate for that purpose and to the parliament of the Member State concerned and shall assess, in particular, whether corrective measures are needed.

The competent committee of the European Parliament may offer the opportunity to the Member State concerned to participate to an exchange of views on the progress made under post- programme surveillance.

4.   The Council, acting by qualified majority on a proposal from the Commission , may recommend to the Member State under post programme surveillance to adopt corrective measures.

4.   The Commission may adopt a recommendation that the Member State under post-programme surveillance adopt corrective measures. The Council may, within 10 days of such a recommendation, repeal it by qualified majority.

4a.     The parliament of the Member State concerned may invite the Commission to participate in an exchange of views on the post-programme surveillance.

For the measures referred to in Articles 2(1), 3, 6(2), 6(4) and 11(4) , only members of the Council representing Member States whose currency is the euro shall vote and the Council shall act without taking into account the vote of the member of the Council representing the Member State concerned.

For the measures referred to in this Regulation , only members of the Council representing Member States whose currency is the euro shall vote and the Council shall act without taking into account the vote of the member of the Council representing the Member State concerned.

Article 13

Types of assistance and loans excluded from the application of Articles 5 and 6

The provisions of Article 5 and 6 do not apply to financial assistance granted on a precautionary basis and to loans made for recapitalising financial institutions.

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Article 13a

Informing the European Parliament

The Council and the Commission shall regularly inform the European Parliament of the application of this Regulation.

Article 13b

Transitional provisions

This Regulation shall apply to the Member States that are already subject to programme assistance on [date of entry into force of this Regulation].

Article 13c

Report

By 1 January 2014 and every five years thereafter, the Commission shall publish a report on the application of this Regulation.

That report shall evaluate, inter alia:

2.     Where appropriate, the report referred to in paragraph 1 shall be accompanied by a proposal to amend this Regulation.

3.     The report referred to in paragraph 1 shall be sent to the European Parliament and to the Council.