FantasticSearch

(21) For the first national medium-term fiscal-structural plans, the plausibility of government debt declining in the medium term should be based on the methodology described in the Commission’s Debt Sustainability Monitor 2023. A working group on debt sustainability analysis should explore possible methodological improvements, including on the underlying assumptions. That working group should be composed of experts from the Member States, the Commission and the European Central Bank. The European Fiscal Board and the European Stability Mechanism should be invited by that working group as observers. The competent committee of the European Parliament should have the possibility to invite the Commission to present its methodology in the context of the economic dialogue established by this Regulation.

(22) In order to assess whether further adjustments are required at the end of the four- or five-year implementation period of the national medium-term fiscal-structural plan, the Commission should reassess the situation and put forward a new reference trajectory if the government debt of the Member State is still above 60 % of GDP or its government deficit is higher than 3 % of GDP.

(23) Each national medium-term fiscal-structural plan should mention its status in the context of national procedures, in particular whether it was presented to the national parliament and whether it has been approved by the national parliament. The national medium-term fiscal-structural plan should also indicate whether the national parliament had the opportunity to discuss the Council recommendation on the previous plan and, where relevant, any other Council recommendation or decision, or any Commission warning. If available, the opinion of the independent fiscal institution established in accordance with Council Directive 2011/85/EU should be attached to the national medium-term fiscal-structural plan submitted to the Commission. Prior to the submission of the second and subsequent national medium-term fiscal-structural plan, each Member State should conduct, in accordance with its national legal framework, a consultation of social partners, regional authorities, civil society organisations and other relevant national stakeholders. Information on the consultation of national parliaments and on the consultation process should be included in the national medium-term fiscal-structural plan. Given the tighter schedule envisaged for the preparation of the first national medium-term fiscal-structural plans, Member States could conduct a consultation in the run-up thereto with appropriate deadlines.

(24) In the case of a newly appointed government, a Member State should have the possibility to submit a revised national medium-term fiscal-structural plan to the Commission. If there are objective circumstances preventing the implementation of a national medium-term fiscal-structural plan, a Member State should have the possibility of requesting to submit a revised plan to the Commission no later than 12 months before the end of the current plan.

(25) Where Member States use assumptions in their national medium-term fiscal-structural plans that differ from the medium-term government debt projection framework, they should explain and duly justify the differences in a transparent manner and based on sound economic arguments in the technical dialogue and in their national medium-term fiscal-structural plans.

(26) Where the Council considers that the revised national medium-term fiscal-structural plan of a Member State does not comply with the requirements of this Regulation, the Council should recommend, as a rule, the original reference trajectory that had been previously transmitted by the Commission as the net expenditure path.

(27) In order to allow for a proper interaction between the common Union framework and national budgetary frameworks, the Commission should base its assessment of Member States’ compliance with their respective net expenditure paths as set by the Council only on net expenditure developments. Member States should be able to set their national budgetary objectives in terms of a different indicator, such as the structural balance if this is required by their national budgetary framework.

(28) The Commission’s assessment of the national medium-term fiscal-structural plans should examine in particular the plausibility of the macroeconomic and fiscal assumptions, to the extent that they differ from those underlying the reference trajectory. In particular, the debt projections at unchanged policy to be included in the plan should be comparable with the projections of the Commission.

(29) In order to ensure the implementation of the national medium-term fiscal-structural plans, the Commission and the Council should monitor the reforms and investments included in those plans under the European Semester, based on the annual progress reports submitted by the Member States, and in accordance with Articles 121 and 148 TFEU. To that effect, they should engage in an economic dialogue with the European Parliament.

(30) The European Parliament should be duly involved in a regular and structured way in the European Semester in order to increase transparency, accountability and ownership for the decisions taken in the context of the European Semester. The President of the Council and the Commission should regularly inform the European Parliament of the results of the multilateral surveillance pursuant to this Regulation. Information to be provided in the context of this Regulation should be prepared and transmitted by the Commission to the Council, and should be made available to the European Parliament without undue delay.

(32) The set of reforms and investments underpinning an extension of the adjustment period should be consistent with commitments included in the approved recovery and resilience plan of the Member State concerned during the period of operation of the Recovery and Resilience Facility and the Partnership Agreement agreed under the Multiannual Financial Framework. Where recovery and resilience plans include ambitious reforms and investments, in particular with regard to economic growth and fiscal sustainability over the medium term, they should be considered as complying with the requirements for the extension of the adjustment period for the first national medium-term fiscal-structural plans.

(33) The set of reforms and investments set out in the national medium-term fiscal-structural plans should be aligned with the common priorities of the Union, which includes achieving: a fair green and digital transition, including consistency with the climate objectives set out in Regulation (EU) 2021/1119; social and economic resilience, including the European Pillar of Social Rights; energy security; and, where necessary, the build-up of defence capabilities. The Commission should pay particular attention to those priorities in its assessment of the national medium-term fiscal-structural plans. That set of reforms and investments should also be consistent with the implementation of the national strategies determined by the Member State concerned to address those Union priorities.

(40) In the case of major shocks to the euro area or to the Union as a whole, it is necessary to have a general escape clause to be able to deal with a severe economic downturn in the euro area or the Union as a whole by allowing for a deviation from the net expenditure path as set by the Council, provided that such deviation does not endanger fiscal sustainability over the medium term. The triggering and extension of the general escape clause is to be subject to a Council recommendation, which the Council should endeavour to adopt within four weeks of a Commission recommendation. The European Fiscal Board should deliver an opinion on the extension of the general escape clause.

(41) In addition to the general escape clause, there should also be a country-specific escape clause to allow a deviation from the net expenditure path as set by the Council where exceptional circumstances, such as unpredictable exogenous events that are outside the control of the Member State, have a major impact on the public finances of the Member State and require counter-cyclical fiscal measures, provided that such deviation does not endanger fiscal sustainability over the medium term. The triggering and extension of country-specific escape clauses is to be subject to a Council recommendation, which the Council should endeavour to adopt within four weeks of a Commission recommendation, taking into account the request of the Member State concerned to trigger or extend the country-specific escape clause.

(42) This Regulation is part of a package together with Council Regulation (EU) 2024/1264 and Council Directive (EU) 2024/1265 . Together, these three legislative acts (hereinafter jointly referred to as ‘the economic governance framework reform’) reform the economic governance framework of the Union, incorporating into Union law the substance of Title III (Fiscal Compact) of the Treaty on Stability, Coordination and Governance in the Economic and Monetary Union of 2 March 2012 (the ‘TSCG’), in accordance with Article 16 of that Treaty. By building on the experience of the implementation of the TSCG by the Member States, the economic governance framework reform retains the Fiscal Compact’s medium-term orientation as a tool to achieve budgetary discipline and growth promotion. The economic governance framework reform includes a strengthened country-specific dimension aimed at enhancing national ownership, including by maintaining the advisory role of independent fiscal institutions, which draws essentially on the Fiscal Compact’s common principles on national fiscal correction mechanisms proposed by the Commission in its communication of 20 June 2012 in accordance with Article 3(2) TSCG. The analysis of expenditure net of discretionary revenue measures for the overall assessment of compliance required by the Fiscal Compact is set out in this Regulation. As in the Fiscal Compact, temporary deviations from the medium-term plan are only permitted in exceptional circumstances in accordance with this Regulation and in line with the provisions on the control account. In a similar vein to the Fiscal Compact, in the event of significant deviations from the medium-term plan, measures should be implemented to correct the deviations over a defined period. The economic governance framework reform strengthens fiscal surveillance and enforcement procedures to deliver on the commitment of promoting sound and sustainable public finances and sustainable and inclusive growth. The economic governance framework reform thus retains the fundamental objectives of budgetary discipline and debt sustainability set out in the Fiscal Compact.