Communication: Finland – report prepared in accordance with Article 126(3) of the Treaty

Article 126 of the Treaty on the Functioning of the European Union (TFEU) lays down the excessive deficit procedure (EDP). This procedure is further specified in Council Regulation (EC) No 1467/97 “on speeding up and clarifying the implementation of the excessive deficit procedure”, which is part of the Stability and Growth Pact. Specific provisions for euro area Member States under EDP are laid down in Regulation (EU) No 473/2013.

According to Article 126(2) TFEU, the Commission has to monitor compliance with budgetary discipline on the basis of two criteria, namely: (a) whether the ratio of the planned or actual government deficit to gross domestic product (GDP) exceeds the reference value of 3% (unless either the ratio has declined substantially and continuously and reached a level that comes close to the reference value; or, alternatively, the excess over the reference value is only exceptional and temporary and the ratio remains close to the reference value); and (b), whether the ratio of government debt to GDP exceeds the reference value of 60% (unless the ratio is sufficiently diminishing and approaching the reference value at a satisfactory pace).

Article 126(3) TFEU stipulates that, if a Member State does not fulfil the requirements under one or both of the above criteria, the Commission has to prepare a report. The Commission may also prepare a report if, notwithstanding the fulfilment of the requirements under the criteria, it is of the opinion that there is a risk of an excessive deficit. This report also has to “take into account whether the government deficit exceeds government investment expenditure and take into account all other relevant factors, including the medium-term economic and budgetary position of the Member State”.

This report, which represents the first step in the EDP, analyses the reasons for Finland being non-compliant with the deficit and debt criterion of the Treaty, with due regard to the economic background and other relevant factors.

The report updates the previous Commission's assessment of the excess of the debt ratio over the reference value of 27 February 2015. In the February report it was found that Finland is in compliance with the debt criterion on account of the contribution to the solidarity operations. Respect of the deficit criterion was not considered in detail, as the previous forecasts indicated that the deficit would remain below the 3%-of-GDP reference value.

The current report takes account of the Commission's 2015 spring forecast and an evaluation of subsequent developments, in order to examine whether further steps under the EDP are warranted, after all relevant factors have been considered, where appropriate. Section 2 of the report examines compliance with the deficit criterion. Section 3 examines compliance with the debt criterion. Section 4 deals with public investment and other relevant factors.

• Primary Source

EUR-Lex: COM(2015)246: Follow the progress of this report through the decision-making procedure http://eur-lex.europa.eu/legal-content/EN/HIS/?uri=COM:2015:246:FIN

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