In this respect, governments should strive for transparency and predictability of the policy regime, a low compliance burden, and effective governance in applying the rule of law. Fiscal policy It is also crucial that the achievement of price stability is supported by sound fiscal positions, the third building block of convergence.
Irresponsible fiscal policies can jeopardise credibility, as higher inflation becomes desirable to reduce the real value of government debt. Fiscal policies should be sustainable and oriented to the medium term. They should further aim at mitigating undesirable trend growth differentials through “high quality” expenditure and tax policies.