Sound fiscal policies in all euro area Member States are a prerequisite for the smooth functioning of EMU. The EU fiscal framework calls for government budgets to be close to balance or in surplus over the medium term and for excessive deficits (above 3% of GDP) to be avoided or, if they have occurred, to be corrected promptly. In this context, the assessment of a country’s fiscal policy is based on compliance with nominal deficit targets and on whether the required government action – its fiscal effort – to achieve these targets on a sustainable basis in a given time period has been sufficient.[...]