Adopted in 1997, the Stability and Growth Pact obliges EU Member States to respect two main criteria: a public deficit below 3 per cent of the GDP and a public debt below 60 per cent of GDP. In the event of excessive deficit, a sanction procedure can be launched by the European Commission. The ECOFIN Council then adopts recommendations vis-à-vis the State in question. If the excesses are confirmed, the ECOFIN Council can impose sanctions: a deposit of a sum with the ECB that might rise to 0.5 per cent of the GDP of the State in question or a fine of an equivalent sum.
“The smooth functioning of the EMU requires not only the swift and vigorous implementation of the measures already agreed under the reinforced economic governance framework …notably the Stability and Growth Pact…” Source: HvR June 2012 Report
Implementation of the Stability and Growth Pact
Annexes
DG ECFIN's Vade mecum on the Stability and Growth Pact and Building a Strengthened Fiscal Framework in the European Union: A Guide to the Stability and Growth Pact, May 2013