while the experiences with budgetary coordination have overall been positive some lessons can be drawn
the analysis of the first ten years reinforces the case for strengthening the effectiveness of budgetary surveillance in good times
it also shows the need to address broader issues which may affect the macroeconomic stability of a member state and the overall functioning of economic and monetary union
it thus contains adverse effects of expectations of rising deficits and debt on risk premia and private consumption and investment
fiscal policy coordination should better guide national budgetary behaviour over the whole cycle that is both in good times and in bad times
increased attention should be paid to monitoring public debt developments while medium-term budgetary objectives should be strengthened to address implicit liabilities
all these kinds of developments call for deeper budgetary surveillance
but surveillance should also be broadened to take account of developments within member states that may affect budgetary sustainability such as the growth of current account deficits persistent inflation divergences persistent divergences in the evolution of unit labour costs or trends of unbalanced growth
surveillance must build on the existing instruments
the key instruments for fiscal policy surveillance and economic policy coordination are clearly anchored in the treaty and indeed in the stability and growth pact
the recent adoption of the european economic recovery plan by the commission on twenty-six november last year also breaks new ground as far as governance and budgetary coordination is concerned
it highlights the commission's role as a catalyst for short-term emergency economic stabilisation policies
based on our own economic assessment the commission has quickly set up a fully fledged and quantified economic response to the economic slowdown
the commission's quick delivery is a response to the clear risks of bigger-than-ever national economic policies at this juncture
the recovery plan recognises the inherent division of tasks embedded into the eu economic policy framework
since member states are responsible for budgetary policy the commission set a global target for additional fiscal stimulus taking into account the amount needed to kick-start the eu economy as a whole
member states are free to devise the size and composition of their respective fiscal stimulus
it now implies challenges in terms of coordination and surveillance of the implementation of national measures
the commission and the ecofin council will jointly monitor the implementation of the national measures in compliance with the principles laid down in the recovery plan
looking forward judicious implementation of the fiscal surveillance framework will anchor expectations of future fiscal developments
together with the strengthening of national budgetary frameworks and rules and the implementation of reforms curbing the rise in age-related expenditure this will ensure that sustainable positions are restored
