By Jan Strupczewski
BRUSSELS (Reuters) - European Union finance ministers agreed on Wednesday on a fourth reform of the EU's fiscal rules, known as the Stability and Growth Pact, which underpin the value of the euro currency.
The pact is complex but is built on two crucial principles: an upper limit for a country's national budget deficit, and an upper limit for its total public debt.
Below are key dates in its often turbulent history.
1992 EU countries sign the Treaty of Maastricht, establishing a ceiling for national budget deficits at 3% and for debt at 60% of national output - with a discipline procedure for breaches.
1995 German Finance Minister Theo Waigel proposes countries adopting the euro agree to toughen rules on budget deficits and impose financial sanctions against deficit violators.
1997 Stability and Growth Pact rules are written up formally as regulations so that governments can coordinate fiscal policy in the soon-to-be-launched monetary union.
1999 To great fanfare, the euro currency is introduced in a historic moment for European integration.
2002 Only three years later comes the first major challenge to the pact's credibility as euro founders France and Germany run deficits above the 3% limit. They are requested to cut them.
2003 But rather than fall, the deficits of France and Germany rise further above the limit. The Commission asks the council of EU finance ministers - essentially, a grouping of all the EU national capitals - to approve harsher disciplinary action against Paris and Berlin. But the two countries organise a blocking minority and prevent tougher steps against them.
2004 The European Commission goes to the EU's top court to sue the council of finance ministers for blocking pact rules. It wins, but partly only on procedural grounds.
2005 In the aftermath, the EU reforms the rules for the first time. Crucially, a new set of goals give more leeway to national capitals taking into account the cyclical and structural factors in their deficits. Governments get more time to cut excess gaps and cannot be disciplined for minor or temporary breaches.
2011 Amid a sovereign debt crisis triggered after Greece hid the dire state of its finances from pact monitors, the rules are reformed again. Enter the so-called "six-pack", named after the six regulations that broaden the scope for fines and introduce new debt-cutting requirements, government spending ceilings and the monitoring of "excessive imbalances" in national economies.
2013 Still reeling from the sovereign debt crisis and keen to prevent a new one, the EU amends the rules yet again through two regulations, this time dubbed the "two-pack". The main change is that every year by Oct. 15, euro zone governments have to send to the Commission the main assumptions of their budgets for the following year for vetting whether they are in line with EU rules. If not, the Commission can demand a new budget.
2023 Following a surge in pubic debt during the COVID-19 pandemic and the energy price crisis caused by Russia's invasion of Ukraine, the EU decides to adjust the rules yet again, because the old rules are no longer realistic.
The reform gives governments more time to cut the amassed public debt, at a pace that is tailor-made for each country though with some common minimum effort, and provides incentives to maintain public investment even during budget consolidation.