A rigorous and consistent implementation, in line with the renewed political commitment to the fiscal framework, is crucial for sound public finances in the euro area. The credibility of the reformed Pact will be tested in the coming months as the budgetary positions of countries with excessive deficits will be assessed by the Commission and the Council.
This test should be passed successfully not only because it is important for the credibility of the fiscal framework but also in order to ensure the compatibility of fiscal policies with the stability-oriented monetary policy, the anchoring of expectations of fiscal discipline and the establishment of macroeconomic conditions conducive to sustainable growth. 4  BIS Review 42/2005