Stability And Growth Pact - SGP

AAA

DEFINITION of 'Stability And Growth Pact - SGP'

An agreement between the 16 countries that form the European Union (EU) and use the euro as currency. The SGP, enacted in 1997, was created to establish rules to ensure that all involved countries help maintain the value of the euro by enforcing fiscal responsibility. Specifically, each country must maintain an annual budget deficit that is no greater than 3% of GDP, and each must have a national debt that is lower than 60% of GDP.

INVESTOPEDIA EXPLAINS 'Stability And Growth Pact - SGP'

The SGP was established in the hopes of unifying the eurozone's financial policies to enable a strong euro. The European Commission is charged with enforcing the SGP and has been criticized for being too lenient by not imposing penalties on countries that have not operated within the rules. The goal of the SGP is for the eurozone members to reach what is called "economic and monetary union" (EMU) with low inflation, low interest rates, and controlled debt and spending.

RELATED TERMS
  1. Maastricht Treaty

    A treaty that is responsible for the creation of the European ...
  2. Euro

    The official currency of the European Union's (EU) member states. ...
  3. Eurozone

    A geographic and economic region that consists of all the European ...
  4. European Economic and Monetary ...

    The successor to the European Monetary System (EMS), the combination ...
  5. European Union - EU

    A group of European countries that participates in the world ...
  6. Fair Housing Act

    This law (Title VIII of the Civil Rights Act of 1968) forbids ...
RELATED FAQS
  1. How do I use the rule of 72 to estimate compounding periods?

    The rule of 72 is best used to estimate compounding periods that are factors of two (2, 4, 12, 200 and so on). This is because ... Read Full Answer >>
  2. How much risk is associated with subprime mortgages?

    A large amount of risk is associated with subprime mortgages. Since the mortgages are specifically for people who do not ... Read Full Answer >>
  3. What is the difference between induced consumption and autonomous consumption?

    The first step to determining the difference between autonomous and induced consumption is to look at what each of these ... Read Full Answer >>
  4. How does stratified random sampling influence government policy decisions?

    Governments use various analytical techniques to examine the potential costs and benefits of policy options. One of those ... Read Full Answer >>
  5. How is an unfavorable variance discovered?

    An unfavorable variance is discovered when actual numbers and budget numbers are compared. Unfavorable variance can be computed ... Read Full Answer >>
  6. Why does zero-based budgeting require ongoing evaluation and management?

    Zero-based budgeting must have ongoing evaluation and management due to the fact a zero-based budget requires management ... Read Full Answer >>
Related Articles
  1. Options & Futures

    American Vs. European Options

    These two options have many similar characteristics, but it's the differences that are important.
  2. Forex Education

    Making Sense Of The EUR/CHF Relationship

    The strong correlation between EUR and CHF currency pairs is undeniable. Find out what it means for forex traders.
  3. Mutual Funds & ETFs

    Go International With Foreign Index Funds

    As global trade continues to expand and the world's economies grow, spice up your portfolio with these exciting opportunities.
  4. Forex Education

    Get To Know The Major Central Banks

    The policies of these banks affect the currency market like nothing else. See what makes them tick.
  5. Forex Education

    How International Tax Rates Impact Your Investments

    International investors need to be aware of the staggering correlation between tax rates and economic performance.
  6. Options & Futures

    Getting To Know The Money Market

    If you need liquidity and safety on a sum of money, don't forgo potential interest by keeping the funds as cash.
  7. Economics

    What is a Resident Alien?

    A resident alien is a foreigner who is a permanent resident of the country in which he or she resides but does not have citizenship.
  8. Personal Finance

    Affordable Ways For Upgrading Your Home

    Upgrading your home doesn’t have to be an expensive chore. Here we give you 8 affordable ways to increase its appeal.
  9. Retirement

    Millennials: Retire With $1,000,000 --Here's How

    It is possible for Millennials to retire with $1,000,000, if they take the right steps and make the necessary sacrifices now.
  10. Budgeting

    The Adverse Effects of Cheap Gas

    While low gas prices are welcomed, smart budgeters must anticipate future price hikes and consider the impact of low gas prices on investments and taxes.

You May Also Like

Hot Definitions
  1. American Dream

    The belief that anyone, regardless of where they were born or what class they were born into, can attain their own version ...
  2. Multicurrency Note Facility

    A credit facility that finances short- to medium-term Euro notes. Multicurrency note facilities are denominated in many currencies. ...
  3. National Currency

    The currency or legal tender issued by a nation's central bank or monetary authority. The national currency of a nation is ...
  4. Treasury Yield

    The return on investment, expressed as a percentage, on the debt obligations of the U.S. government. Treasuries are considered ...
  5. Bund

    A bond issued by Germany's federal government, or the German word for "bond." Bunds are the German equivalent of U.S. Treasury ...
  6. European Central Bank - ECB

    The central bank responsible for the monetary system of the European Union (EU) and the euro currency. The bank was formed ...
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!