Considerations On The Fiscal And Budgetary Implications Of The Activation Of The General Derogatory Clause From The Stability And Growtg Pact

The Stability and Growth Pact was adopted in order to coordinate the national tax policies within the Economic and Monetary Union and initially consisted in the Resolution of the European Council from Amsterdam of 17 June 1997, the Council Regulation (EC) no. 1467/97 of the Council of 7 July 1997 on speeding up and clarifying the implementation of the excessive deficit procedure, and the Council Regulation (EC) no. 1466/97 of the Council of 7 July 1997 on the strengthening of the surveillance of budgetary positions and the surveillance and coordination of economic policies. The derogatory clause is part of the series of additions and amendments introduced following the revision of the legislation in 2011-2013, offering flexibility to the rules establishing the limits of the budgetary deficit and of the public debt. Thus « in case of an unusual event outside the control of the Member State concerned, which has a significant impact on the financial position of the general budget or in case of severe economic downturn for the euro area or the EU as a whole, the Member States can be authorized to temporarily drift from the trajectory of adjustment in order to achieve the medium-term budgetary objective (…) on condition that this does not endanger budgetary sustainability in the medium-term ». Within the pandemic generated by COVID-19 this spring, for the first time since its introduction, the general derogatory clause was activated in order to fight its economic impact.