Fiscal Compact Agreement.pdf

The European Union and euro area have taken measures to improve economic governance and address the sovereign debt crisis, but market tensions have increased. To address this, the European Council agreed to move towards a stronger economic union through:
- a new fiscal compact and strengthened economic policy coordination
- development of stabilisation tools to face short-term challenges

A REINFORCED ARCHITECTURE FOR ECONOMIC AND MONETARY UNION:
The stability of the Economic and Monetary Union requires swift implementation of agreed measures and further moves towards a "fiscal stability union". This will involve enhanced governance, fiscal discipline, and deeper integration in the internal market.

A NEW FISCAL COMPACT:
The compact will include:
- balanced or surplus general government budgets
- an automatic correction mechanism
- convergence towards specific reference levels
- economic partnership programmes for Member States in Excessive Deficit Procedure
- ex ante reporting of national debt issuance plans

ENHANCED ECONOMIC POLICY COORDINATION:
- regular Euro Summits
- discussion and coordination of major economic policy reforms
- benchmarking best practices

STRENGTHENING STABILISATION TOOLS:
- rapid deployment of the European Financial Stability Facility (EFSF) leveraging
- acceleration of the entry into force of the European Stability Mechanism (ESM) treaty
- reassessment of the overall ceiling of the EFSF/ESM
- provision of additional resources for the IMF

KEY POINTS:
- new fiscal compact to ensure fiscal discipline
- strengthened economic policy coordination
- development of stabilisation tools to address short-term challenges
- acceleration of the entry into force of the ESM treaty
- provision of additional resources for the IMF
- regular Euro Summits to reinforce euro area governance.