European standard of fault and Excessive Deficit Procedure

Under the Growth and Stability Pact, all euro area countries must adhere to a public deficit that is no more than 3 percent of their GDP and a public debt no higher than 60 percent of their GDP.
If a deficit exceeds this standard of fault, that particular member state enters the excessive deficit procedure. The procedure puts the country under the obligation to reduce its deficit to a maximum of 3 percent of GDP. Sanctions may be imposed as well during this procedure. This will not be the case if the excessive deficit meets the following criteria:
- It is temporary in nature;
- It is the result of exceptional circumstances, for example an economic crisis.
Member states with a debt exceeding 60 percent of GDP must recover on average one-twentieth of the amount exceeding the limit on an annual basis.
In 2020, the European Commission decided not to apply the European budgetary rules temporarily. By temporarily not applying the budgetary rules, countries can make additional expenditures and investments in order to finance national coronavirus measures.