WHAT IT ACTUALLY MEANS TO COMPLY WITH THE STABILITY AND GROWTH PACT CRITERIA?

This paper focuses on the decomposition of relative indicators of indebtedness: budget deficit and public debt. It argues against the notion that compliance with the Stability and Growth Pact and obeying other subsequent demands on public finances are a matter of responsibility and consistency of EU member states and that this compliance can therefore be achieved and enforced through higher penalties, tighter supervision and specifications of the target values of indicators. A great attention is paid to the mathematical aspects of the matter, relations between the numerator and the denominator in the indices, relations between the types of creditors and observed values, as well as the types of government expenditures and these values. The main objective of the paper is to examine the question whether it is actually possible to solve the debt issues by means of fiscal policies or vice versa impossible because indebtedness (as a ratio) is in fact more of an accounting problem. If so, the solution must too be of an accounting and not fiscal - nature.