Communication: 2017 draft budgetary plans: overall assessment

EU legislation foresees that euro area Member States submit Draft Budgetary Plans (DBPs) for the following year to the Commission by 15 October with the aim of improving coordination of national fiscal policies in the Economic and Monetary Union. These plans summarise the draft budgets that governments submit to national parliaments. On each plan, the Commission provides an Opinion, assessing whether it is compliant with the Member State's obligations under the Stability and Growth Pact (SGP). The Commission is also required to provide an overall assessment of the budgetary situation and prospects for the euro area as a whole. The latter assessment is provided in the present Communication along with the Commission Communication Towards a Positive Fiscal Stance for the Euro Area.

Eighteen euro area Member States were required to submit their 2017 DBPs to the Commission by 17 October, in line with the provisions of the so-called Two-Pack. As the remaining euro area country under a macroeconomic adjustment programme, Greece is not obliged to submit a plan, as the programme already provides for close fiscal monitoring. In line with the indications of the Two-Pack Code of Conduct, two countries, Lithuania and Spain, submitted no-policy change DBPs due to caretaker governments being in place. The incoming governments are expected to submit full DBPs once they take office. While respecting Member States' budgetary competence, the Commission's Opinions provide objective policy advice, in particular for national governments and parliaments, to facilitate the assessment of the draft budgets' compliance with EU fiscal rules. The Two-Pack provides for a comprehensive toolbox to treat economic and budgetary policy as a matter of common concern within the euro area, as intended by the Treaty.

In addition, in July 2015, the Council invited the Eurogroup to monitor and coordinate euro area Member States' fiscal policies and the aggregate fiscal stance for the euro area to ensure a growth-friendly and differentiated fiscal policy. The Council recommended that euro area Member States, without prejudice to the fulfilment of the requirements of the SGP, "coordinate fiscal policies to ensure that the aggregate euro area fiscal stance is in line with sustainability risks and cyclical conditions". In November 2015, the Commission proposed an updated Recommendation on the economic policy for the euro area, which was discussed in Council and endorsed by EU leaders at the European Council meeting on 18 and 19 February 2016. This recommendation is an anchor for the Commission's assessment. As part of the annual cycle of the European Semester, the Commission is also proposing a new Recommendation on the economic policy of the euro area for 2017-2018 alongside this package.

The objective of this Communication is twofold. Firstly, it provides an aggregate picture of budgetary policy at euro area level, building on a horizontal assessment of the DBPs. This exercise mirrors the horizontal assessment of Stability Programmes that takes place in the spring, but with a focus on the forthcoming year rather than on medium-term fiscal plans. Secondly, it provides an overview of the DBPs at country level, explaining the Commission's approach in assessing them, specifically, for compliance with the requirements of the SGP. The assessment is differentiated according to whether a Member State is in the preventive or the corrective arm of the SGP and also takes into account the requirements relating to the level and dynamics of government debt.

ESO: Background information: Key Features of 2017 Draft Budgetary Plans http://www.europeansources.info/record/key-features-of-2017-draft-budgetary-plans/

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