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The accession to the euro area will also entail an obligation to follow a balanced economic policy in the future. In
order to avoid the negative impact of an irresponsible fiscal policy on the single currency and price stability, the
Stability and Growth Pact (SGP) has been created, which sets restrictions on governments' fiscal policies of the EU
Member States. The SGP aims to achieve fiscal discipline within Member States and coordinate economic and fiscal
policies, which would foster the sustainable functioning of the common monetary and fiscal policy.
Achievement of fiscal discipline. According to the pact, Member States must aim to achieve a government budget
position close to balance or in surplus in the medium term. A close-to-balance budget position enables Member States to
react to cyclical changes in the economy, while maintaining the annual budget deficit at less than 3% of GDP. The
states have assumed this commitment within the Maastricht Treaty.
Coordination of economic policies. Member States who are members of the monetary union must annually submit a
Stability Programme, and those EU Member States who are striving for membership of the EMU must submit a Convergence
Programme. These programmes provide an overview of the budgetary and economic policies of the countries. The objective
of the economic policy reflected in the Convergence Programme is to meet the Maastricht criteria for the introduction
of the euro, and in the case of the Stability Programme, to continue with a reasonable budgetary policy and to achieve
and maintain a close-to-balance budgetary position. The programmes are submitted to the European Commission and the
Council of the European Union for assessment once a year within the timeframe of mid-October to 1 December, i.e. after
the submission of draft budget to parliaments.
Estonia's role in the economic policy of the EU will increase after obtaining euro area membership. After becoming a
full member of the EMU and the introduction of the euro, representatives of the Ministry of Finance will start to
participate in the work of the Eurogroup. The Eurogroup only comprises representatives of the states using the euro and
its role in making economic policy decisions is on the increase. Representatives of Eesti Pank will have a say in
formulation of monetary policy of the euro area by participating in the work of the Governing Council of the European
Central Bank.
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