Rome, November 22, 2017 - 04.28
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National stability pact

National stability pact

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The National Stability Pact (NSP) springs from the need to direct the economies of EU member states towards specific parameters, common to all countries and shared at a European level as part of the Stability and Growth Pact and specifically in the Maastricht Treaty (net indebtedness of public administration/GDP lower than 3% and public debt/GDP ratio of 60%).

Therefore the net indebtedness of the public administration is the main parameter to be monitored for the purpose of complying with convergence criteria, and the reason for the formation of debt stock.

Net indebtedness is defined as the balance between receipts and expenditure, excluding financial operations (collection and granting of credit, interests and contributions, advances), obtained from the public administration's income statement, prepared by ISTAT (Italy's national statistics institute).

A primary goal of the tax regulations which go to form the national Stability Pact is control of the national indebtedness of territorial bodies (local and regional authorities).

Therefore the Stability and Growth Pact has set limits in terms of planning, results and reorganization, inside which the member states can move independently. Over the years, each of the EU member states has implemented the Stability and Growth Pact at a national level, applying its own criteria and rules in agreement with national legislation concerning the management of tax relations between various levels of government.

From 1999 to date, Italy has formulated its own national Stability Pact, each year stating the planning goals for territorial bodies and corresponding results in a variety of ways, mainly alternating different configurations of financial balances to fit expenditure before reverting to the same balances.

The rules of the national stability pact are defined while preparing and approving the Finance Act; the latter being a moment when forecasts regarding the trend of public finance are analyzed, and the scale and nature of the remedial measures to be implemented for the following year decided.