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1. The Commission shall make a proposal to the Council to suspend all or part of the commitments or payments where the Council decides in accordance with Article 126(8) or (11) TFEU that a Member State has not taken effective action to correct its excessive deficit, unless it has determined the existence of a severe economic downturn for the Union as a whole within the meaning of Articles 3(5) and 5(2) of Council Regulation (EC) No 1467/97 ().

2. The Commission may make a proposal to the Council to suspend all or part of the commitments or payments in relation to any of the following cases:

(a) where the Council adopts two successive recommendations in the same excessive imbalance procedure in accordance with Article 8(3) of Regulation (EU) No 1176/2011 on the grounds that a Member State has submitted an insufficient corrective action plan;

(b) where the Council adopts two successive decisions in the same excessive imbalance procedure in accordance with Article 10(4) of Regulation (EU) No 1176/2011 establishing non-compliance by a Member State on the grounds that it has not taken the recommended corrective action;

(c) where the Commission concludes that a Member State has not taken measures as referred to in Regulation (EC) No 332/2002 and as a consequence decides not to authorise the disbursement of the financial assistance granted to that Member State;

(d) where the Council decides that a Member State does not comply with the macroeconomic adjustment programme referred to in Article 7 of Regulation (EU) No 472/2013, or with the measures requested by a Council decision adopted in accordance with Article 136(1) TFEU. Priority shall be given to the suspension of commitments; payments shall be suspended only when immediate action is sought and in the case of significant non-compliance. The decision to suspend payments shall apply to requests for payments submitted after the date of the decision to suspend.

3. A proposal by the Commission for a decision to suspend commitments shall be deemed adopted by the Council unless the Council decides, by means of an implementing act, to reject such a proposal by qualified majority within one month of the submission of the Commission proposal. The suspension of commitments shall apply to the commitments from 1 January of the year following the adoption of the decision to suspend. The Council shall adopt a decision, by means of an implementing act, on a proposal by the Commission referred to in paragraphs 1 and 2 in relation to the suspension of payments.

4. The scope and level of the suspension of commitments or payment to be imposed shall be proportionate, respect the equality of treatment between Member States and take into account the economic and social circumstances of the Member State concerned, in particular the level of unemployment, the level of poverty or social exclusion in the Member State concerned compared to the Union average and the impact of the suspension on the economy of the Member State concerned.

5. The suspension of commitments shall be subject to a maximum of 25 % of the commitments or 0,25 % of nominal GDP, whichever is lower, in any of the following cases:

(a) in the first case of non-compliance with an excessive deficit procedure as referred to in paragraph 1;

(b) in the first case of non-compliance relating to a corrective action plan under an excessive imbalance procedure as referred to in point (a) of paragraph 2;

(c) in the case of non-compliance with the recommended corrective action pursuant to an excessive imbalance procedure as referred to in point (b) of paragraph 2;

(d) in the first case of non-compliance as referred to in points (c) and (d) of paragraph 2. In the case of persistent non-compliance, the suspension of commitments may exceed the maximum percentages set out in the first subparagraph.

6. The Council shall lift the suspension of commitments on a proposal from the Commission, in accordance with the procedure set out in the first subparagraph of paragraph 3 of this Article, in the following cases:

(a) where the excessive deficit procedure is held in abeyance in accordance with Article 9 of Regulation (EC) No 1467/97 or the Council has decided in accordance with Article 126(12) TFEU to abrogate the decision on the existence of an excessive deficit;

(b) where the Council has endorsed the corrective action plan submitted by the Member State concerned in accordance with Article 8(2) of Regulation (EU) No 1176/2011 or the excessive imbalance procedure is placed in a position of abeyance in accordance with Article 10(5) of that Regulation or the Council has closed the excessive imbalance procedure in accordance with Article 11 of that Regulation;

(c) where the Commission has concluded that a Member State has taken appropriate measures as referred to in Regulation (EC) No 332/2002;

(d) where the Commission has concluded that the Member State concerned has taken appropriate measures to implement the macroeconomic adjustment programme referred to in Article 7 of Regulation (EU) No 472/2013 or the measures requested by a Council decision adopted in accordance with Article 136(1) TFEU. After the Council has lifted the suspension of commitments, the Commission may again enter into the commitments previously suspended without prejudice to Article 3(4), (7) and (9) of Regulation (EU) 2020/2094. A decision concerning the lifting of the suspension of payments shall be taken by the Council on a proposal by the Commission in accordance with the procedure set out in the third subparagraph of paragraph 3, where the applicable conditions set out in the first subparagraph of this paragraph are fulfilled.

7. The Commission shall keep the European Parliament informed of the implementation of this Article. In particular, when the Commission makes a proposal pursuant to paragraph 1 or 2, it shall immediately inform the European Parliament and provide details on commitments and payments which could be subject to a suspension. The competent committee of the European Parliament may invite the Commission to discuss the application of this Article in the context of a structured dialogue in order to allow the European Parliament to express its views. The Commission shall give due consideration to the views expressed by the European Parliament. The Commission shall transmit the proposal for suspension or the proposal to lift such a suspension, to the European Parliament and to the Council without delay after its adoption. The European Parliament may invite the Commission to explain the reasons for its proposal.

8. By 31 December 2024, the Commission shall carry out a review of the application of this Article. To that end, the Commission shall prepare a report which it shall transmit to the European Parliament and the Council, accompanied where necessary by a legislative proposal.

9. Where there are major changes in the social and economic situation in the Union, the Commission may submit a proposal to review the application of this Article, or the European Parliament or the Council, acting in accordance with Articles 225 or 241 TFEU respectively, may request the Commission to submit such a proposal.