Structure of Presentation
    1. Introduction.
    2. Current Situation.
    3. New Economic Requirements.
    4. National Experience.
    5. Possible consequences for candidate 
       and potential candidate countries. 
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                     Introduction
         Crisis exposed gaps in the current 
          governance system.
         Crisis showed that economic policy 
          coordination needs to be enhanced.
         Macroeconomic imbalances – high 
          current a/c deficits, competitiveness 
          problems, public finance sustainability 
          issues.
         Existing framework focused more on 
          budget deficits than on public debt 
          and/or other sustainability indicators. 
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                Current Situation
     Large fiscal imbalances (deficit and debt).
     Competitiveness gaps  between north 
     and south.
     Asset price bubbles.  
     Banking sector - overheating – private 
     sector loans – nationalization of private 
     debt.
     Absence of a credible financial crisis 
     management mechanism.
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                  Current Situation
     Revenue windfalls in good economic times 
      not sufficiently used to create fiscal space 
      for bad times.
     Assessment of budgetary policies in 
      cyclically- adjusted terms surrounded by a 
      large degree of uncertainty.
     Existing sanctions for non - compliance 
      come late in surveillance process, when 
      degree of deterrence is weak or lost.
     Surveillance of government deficits not 
      sufficient to ensure decline in debt – to - GDP 
      ratios.
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         New Economic 
         Requirements
           Close to finalizing a comprehensive and 
            coherent package of reforms that will 
            strengthen the SGP further.
           Increased focus on public debt and fiscal 
            sustainability.
           Surveillance of macroeconomic imbalances-
            divergence  in competitiveness among the 
            euro area (EU 27).  
           National fiscal frameworks to be strengthened 
            and aligned with the EU’s  new economic 
            governance rules.
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