BALANCED BUDGET RULE IN EUROPEAN UNION

GNJATOVIĆ Dragana (Professor of Economics University of Kragujevac), dragana_gnjatovic@yahoo.com
JOVANCAI Ana (Megatrend University, Belgrade, Serbia)

The paper analyses theoretical grounds, legal framework and the implementation of the balanced budget rule in the European Union. We start from the hypothesis that the present preference for stricter implementation of the theory of budget stabilization is primarily a function of preserving the stability of the European Single Currency. The aim of this paper has been to interrogate the new fiscal governance framework aimed at enabling the European Union to strengthen the surveillance over public finances of the Member States. Two key characteristics of this new framework are as follows: introduction of quantitative indicators for financial position of each Member State and transfer of fiscal sovereignty from national to supra national level. We are also analyzing the fiscal position of Serbia as well as the ratio between its indicators and reference values anticipated by the Maastricht convergence criteria.

Keywords: balanced budget rule, fiscal discipline, government budget deficit, public debt, euro zone, European Union