Primary fiscal balance 1999 5.8 2000 5.8

on the contribution of fiscal consolidation efforts as reflected in the primary balance

constant primary balance

Deficit debt adjustments , reflecting among other things financial transactions which leave the deficit unaffected but have an impact on debt , exerted an upward effect of 0.3 percentage point on the euro area average debt ratio in 2000 .

Balance of primary income , net 11 . Social benefits other than social benefits in kind 12 .

Overall fiscal balance 1999 1.6 2000 1.3

Cyclical component of the budget balance shows the effect on the budget balance of the output gap , as estimated by the European Commission .

Chart A Fiscal developments , 1998 2007 ( as a percentage of GDP ) budget balance cyclically adjusted budget balance 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Sources European Commission ( AMECO database ) and ECB calculations . Note Budget balance figures exclude proceeds from the sale of UMTS licences .

The structural primary budget balance, the International Monetary Fund s preferred measure of fiscal thrust, tightened by an additional 1 1.5 of GDP each year from 2010 to 2012, after which it remained broadly stable.

Non cyclical changes in the government budget balance have , on average , had a broadly neutral impact on the balance .

Non cyclical changes in the government budget balance had a positive impact on the balance , in particular in 2002 .

G L O S S A RY Cyclical component of the budget balance shows the effect on the budget balance of the output gap , as estimated by the European Commission .

European Commission estimates suggest only a marginal improvement in the cyclically adjusted primary balance to GDP ratio ( i.e. the budget balance excluding government debt interest payments and corrected for cyclical influences ) for the euro area as a whole in 1999 .

Among other factors , the revaluation of foreign currency denominated debt contributed to this effect .

Germany Potential future debt ratios under alternative assumptions for fiscal balance ratios ( as a percentage of GDP ) Constant overall balance Constant primary balance Balanced budget

Note Budget balance figures exclude proceeds from the sale of UMTS licences .

Spain Potential future debt ratios under alternative assumptions for fiscal balance ratios ( as a percentage of GDP ) Constant overall balance 70 Constant primary balance Balanced budget

Austria Potential future debt ratios under alternative assumptions for fiscal balance ratios ( as a percentage of GDP ) Constant overall balance 65 Constant primary balance Balanced budget

Subsequently , non cyclical factors contributed to a deterioration of the budget balance in 1999 , while they helped to improve the balance in 2000 and 2001 .

Both a marginal decline in interest expenditure and a moderate improvement of the primary balance should contribute to this development .

Accordingly , the general government budget balance recorded a deficit in each year throughout that period .

With interest expenditure virtually unchanged , the deterioration of the primary balance was the main factor behind this outcome .

Greece largely succeeded in following the dictate set by the troika (the European Commission the ECB, and the IMF) it converted a primary budget deficit into a primary surplus.

However , the fiscal position benefits from a strong economy , with the structural balance probably being in a slight deficit position .

After undergoing a lot of pain and suffering, Greece is close to posting a primary budget surplus.

Intervention at the limits compulsory intervention carried out by central banks , the currencies of which are respectively at the floor and ceiling of their ERM fluctuation margins .

However , since 1994 the primary balance has recorded a surplus which , since 1997 , has outweighed debt increasing effects .

( b ) On the basis of primary fiscal balances ( as a percentage of GDP )

Standing facility a central bank facility available to counterparties on their own initiative .

Option a financial instrument that gives the owner the right , but not the obligation , to buy or sell specific assets ( e.g. a bond or a stock ) at a predetermined price ( the strike or exercise price ) at or up to a certain future date ( the exercise or maturity date ) .

They form part of the economic analysis pillar of the monetary policy strategy of the ECB and are thus one of several inputs into the Governing Council 's assessment of the risks to price stability .

These budgetary developments were mainly the result of strong output growth and revenue windfalls and , only to a small extent , effective fiscal consolidation .

Greece Potential future debt ratios under alternative assumptions for fiscal balance ratios ( as a percentage of GDP )

Sweden Potential future debt ratios under alternative assumptions for fiscal balance ratios ( as a percentage of GDP )

was close to zero and that in the near future economic conditions would continue to exert a positive influence on the budget balance .

Only in 1997 did the primary balance again show a small surplus , thereby marginally curbing the growth of the debt ratio .

Sweden Potential future debt ratios under alternative assumptions for fiscal balance ratios ( as a percentage of GDP ) Constant overall balance 75 70 65 60 55 1998 1999 2000 2001 Constant primary balance Balanced budget

In the area of economic policy , the Commission produces Integrated Guidelines for Growth and Jobs , containing the Broad Economic Policy Guidelines and the Employment Guidelines , and reports to the EU Council on economic developments and policies . It monitors public finances within the framework of multilateral surveillance and submits reports to the EU Council .

Netherlands Potential future debt ratios under alternative assumptions for fiscal balance ratios ( as a percentage of GDP ) Constant overall balance 70 65 60 55 1998 1999 2000 2001 2002 Constant primary balance Balanced budget

Non cyclical factors influences on a government budget balance that are not due to cyclical fluctuations ( see the cyclical component of the budget balance ) .

Keeping this in mind , both the operation of automatic stabilisers and the expansionary fiscal stance adopted in the euro area countries are assessed to have had a sizeable negative impact on the budget balance .

Compared with the previous year , the fiscal balance has improved by 1.3 percentage points and the debt ratio has decreased by 6.4 percentage points .

The third article examines the differences between the government budget balance and the change in government debt in the euro area .

The troika is still demanding that Greece achieve a primary budget surplus (excluding interest payments) of 3.5 of GDP by 2018.

Deterioration of budget balances in 2001 The average budget balance in the euro area deteriorated in 2001 for the first time since 1993 .