It is therefore essential that the recently revised Stability and Growth Pact be implemented in a firm, rigorous and credible manner in order to ensure a rapid return to sound budgetary positions. This will not only facilitate the conduct of monetary policy over time, but is primarily in the interest of the countries themselves.
The positive confidence effects of fiscal consolidation measures can be enhanced if such measures are part of a comprehensive structural reform agenda. I cannot spell out here in detail which reform measures would be appropriate. However, the main thrust of the necessary reforms is fairly obvious and generally agreed upon.