Some countries incurred deficits in excess of the 3% of GDP reference value, in some instances even substantially above the threshold. Nevertheless, the euro area average deficit ratio has remained below the values recorded in the 1980s and 1990s. As a consequence, the long-run increasing trend in the debt ratio, which more than doubled between 1980 (34.2%) and 1997 (74.7%) has been halted.
Nonetheless, further reforms in the fiscal area are needed. Let me mention three major challenges: i) a number of governments still need to correct large fiscal imbalances and improve the structure of public finances; ii) national institutions for fiscal policy making should support the fiscal commitments under the EU framework and iii) governments must prepare for the fiscal burden arising from demographic ageing.