The texts approved on Tuesday broadly follow the Commission proposals, but there are some new elements. First is a new one-off fine of 0.5% of GDP for countries caught fudging their accounts. Reversed qualified majority voting would apply for levying this fine, just as it would for other sanctions. Second, sanctions would kick in earlier than the Commission proposed for countries that disregard recommendations to correct their macroeconomic imbalances. An interest-bearing deposit of 0.1% of GDP would be imposed as soon as the Council decided that a Member State had failed to take corrective measures. The Commission proposal provided that a fine would be imposed only if a Member State disregarded two successive Council recommendations. Thirdly, in cases of deliberate and severe non-compliance with recommendations to correct macro-economic imbalances, fines could be increased from 0.1% of GDP to 0.3%.
Revenue from fines and interest from deposits should be allocated to the European Stability Mechanism, and until it is set up, to the European Investment Bank, rather than to Member States not running excessive deficits, as had been proposed by the Commission.
On debt reduction, a Member State with debt above 60% of GDP would need to reduce its excess debt by an average of 5% per year over a three-year period, whereas the Commission had proposed a fixed 5% per year, over a three year period. On budget-setting standards, the committee text pushes for tougher fiscal rules to apply to euro zone members. The package as approved also calls on the Commission to table reports by the end of this year on establishing a system of common issuance of European sovereign bonds and establishing a European Monetary Fund under EU rules.
The approved texts also give a stronger legal backing to the European economic semester, some elements of the Euro Pact, and the National Reform Programme (NRP) procedures. These elements, which also constitute the broader economic governance framework, were felt to lack the legal backing needed to guarantee their effectiveness. Moreover, the NRP procedures are also strengthened to improve monitoring and compliance.
Due to some of the slimmer majorities, the committee will continue on Wednesday morning to discuss whether to open negotiations with the Hungarian Presidency at this point.