EU Temporarily Suspended the Eurozone Core Document

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The Stability and Growth Pact Suspended by Brussels decision forbade Eurozone states to exceed the state budget deficit of 3 percent of GDP. Aiming at to combating  coronavirus, the EU Economic and Financial Council on Monday, March 23, temporarily suspended the basic Eurozone document - Stability and Growth Pact, using the reservation on the possibility of getting out of it. In accordance with this document, the state budgets of the EU member states were to be reduced with a positive or zero balance. In exceptional cases, the budget deficit was allowed but it should not have exceeded 3 percent of GDP by the end of the fiscal year. Government debt also should not have been above 60 percent of GDP. "The finance ministers of the EU member states agreed with the assessment of European Commission set out in its documents of March 20, 2020, that the conditions for using the general clause on the possibility to suspend the fiscal structural (agreement. - Ed.), and namely, the presence of a serious economic recession in the Eurozone and the EU are fulfilled,” the EU Council statement released following the ECOFIN meeting in a videoconference mode. The use of this reservation will provide the necessary flexibility to take all necessary measures "to support our health care systems and civil protection of the population and to protect our economy, including through further initiative incentives and coordinated actions developed in a timely manner for a certain period and targeted by states members of the EU. Move away from budgetary requirements As the document further notes, in general, the ministers remain “fully committed to the Stability and Growth Pact,” however, the inclusion of a reservation will allow the European Commission and the EU Council take the necessary coordination efforts and “move away from budgetary requirements that apply under normal circumstances.” The latter is done to “cope with economic consequences of the pandemic,” the document further indicates. “Today’s agreement reflects our strong commitment to effectively solve current problems, restore confidence and support the quick Eurozone recovery”, finance ministers of the EU countries concluded. Stability and Growth Pact The Eurozone includes 19 of the 27 countries of the European Union. The euro currency is also in circulation in several countries outside the EU. Large fines could previously be imposed on countries that violated the Stability and Growth Pact.