Stability and Growth Pact

The Stability and Growth Pact (SGP) is an agreement among European Union member countries to maintain fiscal responsibility. It aims to ensure governments manage their budgets responsibly by keeping budget deficits below 3% of their GDP and public debt below 60% of GDP. This helps promote economic stability across the eurozone, preventing excessive borrowing that could lead to financial crises. The pact encourages countries to adopt sound fiscal policies, balancing growth with fiscal discipline, so that individual economic issues do not jeopardize the collective stability of the euro area.