Excessive Deficit Procedure (EDP)
Article 104 of The Treaty establishing the European Community comprises a commitment for the EU Member States to avoid excessive budgetary deficits. In particular, Member States shall comply with budgetary discipline by respecting two criteria defined in the Annex to the Treaty, the Protocol on the excessive deficit procedure. The reference values not to be exceeded are:
- 3% for the ratio of the public deficit to the GDP at market prices
- 60% for the ratio of the public debt to the GDP at market prices
Article 104 also sets out a procedure, known as Excessive Deficit Procedure, to be followed at Community level to identify and counter such excessive deficits. The possibility of financial sanctions is also foreseen in case a Member State does not fulfil the requirements under one or both of these criteria and persists failing to put into practice the measures for deficit reduction, recommended by the Council.
The Stability and Growth Pact, adopted in 1997, strengthened the Treaty provisions on fiscal discipline by clarifying and speeding up the procedure.
According to the Council Regulation (EC) 3605/93, lastly amended by the Council Regulation (EC) 2103/2005, the annual data to be used for the excessive deficit procedure have to be compiled according to the European System of Accounts (ESA95) and provided to the European Commission before 1 April and 1 October each year. These data are examined by the European Commission (Eurostat) and eventually published by Eurostat on the website under the special topic Government Finance.