This is necessary to ensure an efficient allocation of resources by minimising distortions in the incentives of economic agents and by avoiding a permanent increase in the size of the public sector. Second, governments must live up to their commitment to maintain fiscal discipline.
This means that credible fiscal consolidation plans have to be implemented as early as possible, including a consolidation effort of at least 1% of GDP per annum where necessary. If euro area countries do not practise fiscal restraint seriously, the debt dynamics will be in danger of spiralling out of control.