Convergence criteria
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This is an article about European Politics, Convergence criteria is also a mathematical term regarding series
Convergence criteria (also known as the Maastricht criteria) are the criteria for European Union member states to enter the third stage of European Economic and Monetary Union (EMU) and adopt the euro. The four main criteria are based on Article 121(1) of the European Community Treaty. Those member countries who are to adopt the euro need to meet certain criteria which include:
1. Inflation rate: No more than 1.5 percentage points higher than the 3 best-performing member states of the EU (based on inflation).
2. Government finance:
- Annual government deficit:
- The ratio of the annual government deficit to gross domestic product (GDP) must not exceed 3% at the end of the preceding fiscal year. If not, it is at least required to reach a level close to 3%. Only exceptional and temporary excesses would be granted for exceptional cases.
- Government debt:
- The ratio of gross government debt to GDP must not exceed 60% at the end of the preceding fiscal year. Even if the target cannot be achieved due to the specific conditions, the ratio must have sufficiently diminished and must be approaching the reference value at a satisfactory pace.
3. Exchange rate: Applicant countries should have joined the exchange-rate mechanism (ERM II) under the European Monetary System (EMS) for 2 consecutive years and should not have devaluated its currency during the period.
4. Long-term interest rates: The nominal long-term interest rate must not be more than 2 percentage points higher than the 3 best-performing member states (based on inflation).
The purpose of setting the criteria is to maintain the price stability within the Eurozone even with the inclusion of new member states.
[edit] Fulfilment of criteria
| Convergence criteria | Obligation to adopt 4 | Target date | Euro coins design | ||||||
|---|---|---|---|---|---|---|---|---|---|
| Country 1 | Inflation rate 2 | Government finances | ERM II membership | Interest rate 3 | set by the country | recommended by the Commission | |||
| annual government deficit to GDP | gross government debt to GDP | ||||||||
| Reference value 5 | max 2.8% | max. 3% | max. 60% | min. 2 years | max 6.2% | NA | NA | NA | NA |
 Bulgaria |
4.6% | -3.1% 6 | 29.9% | 0 years | 3.8% | yes | 2009-2010 | NA | in progress |
 Cyprus |
2.3% | 2.3% | 69.2% | joined ERM II on 2 May 2005 | 4.1% | yes | 2008 | To be announced | ready |
 Czech Republic |
2.2% | 3.6% | 30.4% | 0 years | 3.8% | yes | unset 8 | NA | in progress |
 Denmark |
2.1% | joined ERM II on 1 January 1999 | opt-out | not yet set | NA | NA | |||
 Estonia |
4.3% | -2.3% 6 | 4.5% | joined ERM II on 28 June 2004 | (4.1%) | yes | 2010 | To be announced | ready |
 Hungary |
3.5% | 10.1% | 61.7% | 0 years | 7.1% | yes | 2010-2014 | NA | in progress |
 Latvia |
6.7% | -0.1% 6 | 12.1% | joined ERM II on 2 May 2005 | 3.9% | yes | 2010-2012 | To be announced | ready |
 Lithuania |
2.7% 7 | 0.5% | 19.7% | joined ERM II on 28 June 2004 | 3.7% | yes | 2010 | To be announced | ready |
 Malta |
3.1% | 3.2% | 74.2% | joined ERM II on 2 May 2005 | 4.3% | yes | 2008 | To be announced | ready |
 Poland |
1.2% | 4.4% | 47.3% | 0 years | 5.2% | yes | 2011 | NA | in progress |
 Romania |
4.0% | 2.5% | 20.3% | 0 years | 8.0% | yes | 2014 | NA | none yet |
 Slovakia |
4.3% | 3.1% | 34.5% | joined ERM II on 28 November 2005 | 4.3% | yes | 2009 | To be announced | ready |
 Sweden |
1.5% | -2% 6 | 50.9% | 0 years | 3.7% | yes | not yet set | NA | none yet |
 United Kingdom |
2.2% | 0 years | opt-out | conditional | NA | NA | |||
| Croatia | 1.8% | 0 years | NA | NA | NA | NA | |||
| Macedonia | 1.2% | 0 years | NA | NA | NA | NA | |||
| Turkey | 7.7% | 0 years | NA | NA | NA | NA | |||
| Albania | 2.4% | 0 years | NA | NA | NA | NA | |||
| Bosnia and Herzegovina | 0.9% | 0 years | NA | NA | NA | NA | |||
| Serbia | 0 years | NA | NA | NA | NA | ||||
| Montenegro 9 | 0 years 9 | NA | NA | NA | NA | ||||
1 Current EU member states that have not yet adopted the Euro, candidates and official potential candidates.
2 No more than 1.5% higher than the 3 best-performing EU member states.
3 No more than 2% higher than the 3 best-performing EU member states.
4 Formal obligation for Euro adoption in the country EU Treaty of Accession or the Framework for membership negotiations.
5 Values from October 2006 report [1]. To be updated each year.
6 Negative deficit value means surplus.
7 Inflation reference value of the March 2006 report was 2.6%, thus the non-entrance of Lithuania to the Eurozone on 1.1.2007 despite that it covers the criteria currently.
8The Czech Republic worked with an official target date of 2010 until 2006, when both the central bank and the government officially dropped this target rate as unachievable. Some vague discussions about 2015 currently in progress, though no official target date is currently set.
9Montenegro uses the euro as its currency, but is de jure not part of the Eurozone and isn't allowed mint any coins or print any notes. Montenegro doesn't have any national currency, so it is currently uncertain what a Montenegrin ERM II membership would mean. criteria fulfilled
[edit] See also
- Euro adoption by the new members states
- Economy of the European Union#Economies of member states
- Stability and Growth Pact
