## Reforming the Stability and Growth Pact

_IMF Policy Discussion Papers, February 1, 2005_

## Source details

**Canonical URL:** [Reforming the Stability and Growth Pact](https://www.imf.org/en/publications/imf-policy-discussion-papers/issues/2016/12/31/reforming-the-stability-and-growth-pact-18031)

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## Bibliographic details
- Authors: Anthony M Annett, Jörg Decressin, Michael Deppler
- Published: February 1, 2005
- Series: IMF Policy Discussion Papers
- DOI: https://doi.org/10.5089/9781451975482.003

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### Executive summary and main findings
- A rules-based fiscal framework, such as the EU’s Stability and Growth Pact (SGP), can be an important bulwark against short-sighted policies.
- Although policies have improved following the SGP’s adoption, shortcomings remain.
- These shortcomings are rooted in the policies rather than the rules; few changes to the rules seem necessary.
- The Excessive Deficit Procedure (EDP) needs a stronger focus on policies rather than outcomes, while remaining operationally simple and transparent.
- Reforms are needed to foster time-consistent national policies, budgetary transparency, and ownership of the Pact.

### Policy recommendations
- Strengthen the Excessive Deficit Procedure by emphasizing the assessment of policies rather than focusing solely on outcomes.
- Maintain operational simplicity and transparency in any EDP reform.
- Promote time-consistent national fiscal policies to reduce deficit bias.
- Increase budgetary transparency across member states.
- Enhance ownership of the Pact at the national level:
  - Parliaments should debate national Stability Programs.
  - National fiscal councils should review national Stability Programs for parliaments.

### Subject areas and keywords
- Subject: Data processing; Economic and financial statistics; Fiscal governance; Fiscal policy; Fiscal rules; Macrostructural analysis; Structural reforms
- Keywords: CBS rule; country ownership; Data processing; deficit bias; deficit target; Europe; excessive deficit; Fiscal governance; Fiscal policy; fiscal rules; PDP; political economy; reduction path; SGP reform debate; SGP regulation; Structural reforms

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## Content in this bundle

- **_pdp02 - Section III argues that fiscal rules are important to stem time-inconsistent, short-sighted**
  - [_pdp02 - Section III argues that fiscal rules are important to stem time-inconsistent, short-sighted (Markdown version)](/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/pdp/2005/_pdp02.pdf.md){rel="alternate" type="text/markdown"}
  - [_pdp02 - Section III argues that fiscal rules are important to stem time-inconsistent, short-sighted (PDF)](/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/pdp/2005/_pdp02.pdf){rel="external" type="application/pdf"}

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_Source: https://www.imf.org/en/publications/imf-policy-discussion-papers/issues/2016/12/31/reforming-the-stability-and-growth-pact-18031_