The preventive arm of the stability and growth pact (SGP) supports EU governments in achieving their commitments on sound fiscal policies and coordination by setting for each country a budgetary target.
This benchmark is a rule which contains the net growth rate of government spending at or below a country’s medium-term potential economic growth rate, depending on the country's position in relation to its medium-term budgetary objectives (MTOs).
Euro area countries outline how they intend to reach their medium-term budgetary objectives (MTOs) in stability programmes, while the other EU countries do so in convergence programmes.
Legal basis and related stages
The Significant Deviation Procedure aims to give Member States the opportunity to correct a deviation from their medium-term objective (MTO) or the adjustment path towards their MTO in order to avoid the opening of an Excessive Deficit Procedure.