The Stability and Growth pPact (SGP) was agreed to at the Dublin European Council summit in December of 1996, and was meant to clarify the excessive deficit procedure of the Maastricht Treaty, once member states had joined Economic and Monetary Union (EMU). Germany, in particular, pushed hard for not just a clarification of how the excessive deficit procedure would work under EMU, but also as a way to allay fears over the implications of the attainment of the Maastricht convergence criteria by traditionally fiscally profligate countries such as Italy and Belgium. The SGP eventually agreed upon in Amsterdam [reference unclear; not Dublin?] included a specified process for identifying and correcting excessive budget deficits, with a procedural timetable and ultimately the imposition of fines to ensure that monetary union in the EU was accompanied by a high degree of convergence in fiscal positions. .
The SGP itself consists of 3 components: i) 2 European Council regulations (1466 and 1467/97); ii) a resolution/directive (17/6/97, #26); and iii) an opinion of the monetary committee ("Opinion on the content and format of stability and convergence programmeprograms", 12 October, 1998). The pact consists of the two Council regulations, with the resolution as a confirmatory measure and the opinion as a clarification for purposes of implementation. The first Council regulation (1466/97) strengthens the surveillance and monitoring of fiscal stance based on Article 99 of the Treaty on European Union. The stability programmeprograms have to contain a medium-term objective for fiscal policy with the budgetary position close to balance or in surplus, the dynamic towards this goal and the assumptions in the programmeprogram, plus measures proposed to achieve the goal and a sensitivity analysis. The programmeprograms are public, and are updated annually. The Council monitors the implementation of the programmeprograms, and if a significant divergence is detected, an "early warning" can be issued to a member state, in the form of a recommendation under Article 99(4) of the Treaty.
