European Economy. Public Finances in EMU-2002. European Economy 2002.3

Abstract

Fiscal policies in the recent juncture: responding to the cyclical slowdown ...2001 proved to be the most challenging period for fiscalpolicy in the three-year history of EMU as the globalslowdown provided the first real stress test of EMU’smultilateral surveillance framework, and especially itsbudgetary dimension. The budget deficit for the euroarea reached 1.3 % of GDP, up from 0.7 % in 2000.Despite this first reversal in the process of budgetaryconsolidation since 1993 and criticism about perceivedfailure to strictly adhere to the provisions of the Stabilityand Growth Pact (SGP), there are several grounds forconsidering the framework for budgetary aspects of themultilateral surveillance framework have performedwell in responding to the cyclical slowdown.