The leaders of 25 European Union members (except for Britain and the Czech Republic), Romania included, early on Friday signed the Treaty on stability, coordination and governance in the Economic and Monetary Union (the Euro zone) in Brussels.
The document was signed by President Traian Basescu for Romania.
The Treaty, the final form of which was agreed on at the informal European Council meeting on Jan. 30, sets a 0.5 percent mark as limit of the structural budget deficit. In the event the public debt is significantly below 60 percent of GDP and there are no risks over the long-term sustainability of the public finances, such structural deficit may reach some 1 percent of GDP. The maximum cyclic budget deficit plus the structural one shall be within 3 percent of GDP, the document says.
The Treaty stipulates that if deviations from such levels are recorded, a correction mechanism will automatically trigger, which must be introduced into the national laws, the same as the so-called golden rule’ on limiting the structural deficit. If a member state fails to transpose these two stipulations into the national legislation, the European Union’s Court of Justice may be notified. Failure to observe the Court’s ruling may attract a financial sanction of no more than 0.1 percent of the concerned country’s GDP.
It is an important stage for strengthening the confidence in our Economic and Monetary Union, said European Council President Herman Van Rompuy at the Treaty signing ceremony.
The pact must be ratified by at least 12 Euro zone signatory states to take effect, but no later than Jan. 1, 2013. Ratification, however, looks set to be complicated by Ireland, that has already announced it will call a referendum on this issue.