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Poland among signatories of EU fiscal treaty


2012-03-03



Prime Minister Donald Tusk was among the 25 EU leaders who on 2 March signed a new treaty on fiscal discipline designed to prevent a repetition of the debt crisis and restore confidence in the future of the eurozone. (The two countries that refused to sign are Great Britain and the Czech Republic).

At the heart of the 16-article document, titled Treaty on stability, co-ordination and governance in the economic and monetary union, is the so-called "balanced budget rule", a requirement for national budgets to be in balance or in surplus, i.e. for the annual structural budget deficits not to exceed 0.5% of GDP at market prices. The rule is to be incorporated into the member states’ national legal systems, preferably at the constitutional level, together with automatic correction mechanisms that will apply in the event of deviation from the rule. The transposition of the rule will be verified by the EU Court of Justice, which will have the power to impose penalties on offending countries of up to 0.1% of their GDP.

The Treaty also reinforces fiscal rules for the euro area by requiring a qualified majority to veto decisions of the European Council, i.e. the summit of EU heads of state or government, on the excessive deficit procedure; and takes steps towards the coordination and convergence of member states’ economic policies and on governance of the euro area, notably by providing for Euro Summit meetings to take place at least twice a year.

The treaty is to come into force on 1 January 2013. To become law, it must be ratified by at least 12 members of the euro area. Those signatories whose currency is not the euro, such as Poland, will be bound by its provisions only once they adopt the euro, unless they declare their intention to be bound by certain provisions at an earlier date.



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