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Fiscal Stability Agreement

Member States bound by the Fiscal Compact must transpose the provisions of the Fiscal Compact into their national legislation. In particular, the State budget must be balanced or in surplus in accordance with the definition of the Treaty. An automatic correction mechanism must be put in place to correct any material misstates. Budgetary supervision should be entrusted to an independent national monitoring institution. The Treaty defines a balanced budget as a general budget deficit not exceeding 3.0% of gross domestic product (GDP) and a structural deficit that does not exceed a medium-term budgetary objective per country (WMO) that cannot exceed 0.5% of GDP for countries with a debt ratio above 60%, i.e. a maximum of 1.0% of GDP for countries with debt below 60%. [7] [8] NTDs by country are recalculated every three years and could be set at a stricter level than the greatest margin of manoeuvre allowed by the Treaty. The Treaty also contains a direct copy of the “debt brake” criteria set out in the Stability and Growth Pact, which specifies the rate of debt decline above the threshold of 60% of GDP. [9] Companies that carry out mining activities that start or carry out operations of more than 350 tons per day up to a maximum of 5,000 tons per day can conclude a ten-year stability agreement. In addition, companies that make an investment commitment of at least $20 million can also conclude the Stability Agreement (the Stability Regime would enter into force from the date on which the full investment is made). Companies may choose to use the stabilized scheme in advance for a maximum period of three years to achieve the minimum investment. Such an early maturity is deducted from the ten-year term.31 Since the above factors may vary depending on the country`s geological potential, political stability, tax regimes and state rules, it is essential for investors in the region to have protection against any changes in local regulations that may affect their investments.

The table also shows the medium-term budgetary objective (MTO) of each Member State for its structural balance and its current target year to achieve that medium-term budgetary objective. Pending the achievement of the EMI, all States are required to follow an adjustment path towards this country-specific target, under which the structural balance must improve by at least 0.5 percentage points per year. The MTO represents the most negative structural balance per year that the country can afford if the debt ratio first falls below 60%, and then remains stable below this level for the next 50 years, while taking into account the expected variation in age-related costs. In addition to the minimum limits of the medium-term debt-based fiscal objective imposed by the Fiscal Compact, there are also two other minimum limits calculated for the MTO, determined by a formula “a safety margin to meet the nominal limit of 3% in times of economic downturn” and “the long-term sustainability of public finances, taking into account forecasts of unfavourable future ageing” 1994, 1995, 1995 The final minimum limit per country for the specific budgetary objective is set at the one which sets the three minimum limits set (note: States which have not acceded to ERM II or which have ratified a proposal under Title III of the Budgetary Pact must respect only the first two minimum limits calculated) and this final limit is set by the European Commission every three years (last time in October 2012[251]) hnet. . . .