The European Commission on Wednesday sent early warning signals to six EU member-states, including Croatia, regarding their respective obligations under the Stability and Growth Pact (SGP), reminding them to take necessary measures so as to maintain their public finances sound and adjust their fiscal policies.
The Commission notified Croatia, Belgium, Finland, Italy and Romania of its concerns regarding their compliance with their fiscal obligations. Spain has been given an Autonomous Commission Recommendation (ACR), a regular tool introduced in the Two-Pack regulation as an early alert to euro area member states in the corrective arm.
Vice-President Valdis Dombrovskis, responsible for the Euro and Social Dialogue, was quoted as saying that the Commission "has identified six countries whose budgetary strategies may entail risks to respecting their commitments under the Stability and Growth Pact. There is still time to take necessary measures and this is why we are sending an early warning signal today. We are ready to engage in a constructive dialogue with those countries in order to minimise such risks."
Commissioner Pierre Moscovici, responsible for Economic and Financial Affairs, was quoted as saying: "Today's steps reflect an updated assessment of the budgetary outlook in a number of countries following the Commission's Winter Economic Forecast. We have now done everything we can to alert national authorities to compliance risks. It is now up to them to take this input on board when they submit their medium-term fiscal plans in April."
By the end of April, Croatia and other members concerned must provide the Commission with their respective national reform and convergence programmes, while member-states in the euro-area send stability programmes instead of convergence programmes.
"On this basis, the Commission will present in spring its proposals for a new set of country-specific recommendations, targeting the key challenges to be addressed. The recommendations will also include fiscal guidance, which will be based on the Commission Spring Forecast which will incorporate final 2015 budgetary data validated by Eurostat," according to the EC's press release.
The SGP envisages that a country's budget gap will not exceed 3% of its GDP, and public debt 60% of GDP. Croatia's fiscal guidances project a budget gap of below 3%, however, the country's public debt is likely to exceed the limit.