The New EU Fiscal Framework: From Negotiation to Implementation

2026-04-14T00:00:00+02:00

In April 2024, the new EU economic governance framework entered into force, the result of negotiations between the 27 EU Member States, the European Commission and the European Parliament that began back in 2022. This revised version of the Stability and Growth Pact (SGP) was intended to rectify the shortcomings of the previous framework namely its excessive inflexibility, doubts about its credibility after the sovereign debt crisis and then the COVID-19 pandemic, and its lack of investment incentives and structural reforms.

Under this new framework, Member States commit to a multiannual fiscal path (see chart below) – complying with the requirements identified in a debt sustainability analysis – and to a set of reforms and investments.

The commitments are now set out as part of the national medium-term fiscal-structural plan (MTFSP), and their implementation is reported on annually and monitored as part of preparing annual progress reports. If this path, which is based on a new single indicator – net primary expenditure – is not adhered to, or the ratio of government deficit to GDP exceeds the reference value of 3%, an excessive deficit procedure may be initiated.

As the deteriorated geopolitical landscape has prompted Europeans to raise their national defence spending, the Commission has, since the first year of implementing these new rules, offered Member States the possibility to use national escape clauses to derogate from the Stability and Growth Pact if they so wish.

IMF Governance and the 16th General Review of Quotas

2025-05-22T00:00:00+02:00

The role of the International Monetary Fund (IMF), which was originally established in 1944 to stabilise currency exchange rates and organise international monetary and financial cooperation, has gradually been expanded. It currently plays an essential role in the international financial system.

The IMF’s governance is based on a system of quotas, which are allocated to each member country. Each country’s quota determines the financial contribution it is required to make to the IMF, its voting rights, and the number of special drawing rights it receives in general allocations. Although most decisions are made by consensus, this governance structure is similar to that of a company limited by shares, with quotas representing both each country’s contribution to the IMF’s permanent resources and its relative voting rights.

Each country’s quota is based on economic variables. The most recent change to the distribution of quotas between countries was made in 2010. Despite developments in the global economy and a number of quota reviews, the IMF’s ownership structure has remained unchanged since then. The 16th review, concluded in December 2023, provides for a uniform 50% increase in each country’s quota, without changing the distribution between countries.

Against this backdrop, questions surrounding a potential reform of the Fund’s governance continue to be relevant. These questions focus on how to realign the level and distribution of quotas with the size of the global economy and the relative weight of member countries. Following the commitment made by its members in October 2023, the IMF’s Executive Board is due to put forward its proposals by June 2025, as part of the 17th General Review of Quotas, including by considering how the theoretical quota formula could be changed.

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The New EU Fiscal Framework: From Negotiation to Implementation

IMF Governance and the 16th General Review of Quotas