Maastricht Criteria
- HICP inflation (12-months average of yearly rates): Shall not exceed the HICP reference value, which is calculated by the end of the last month with available data as the unweighted arithmetic average of the similar HICP inflation rates in the 3 EU member states with the lowest HICP inflation plus 1.5 percentage points
- Government budget deficit: The ratio of the annual general government deficit relative to gross domestic product (GDP) at market prices, must not exceed 3% at the end of the preceding fiscal year (based on notified measured data) and neither for any of the two subsequent years (based on the European Commission's published forecast data). Deficits being "slightly above the limit" ...
- Government debt-to-GDP ratio: The ratio of gross government debt (measured at its nominal value outstanding at the end of the year, and consolidated between and within the sectors of general government) relative to GDP at market prices, must not exceed 60% at the end of the preceding fiscal year. Or if the debt-to-GDP ratio exceeds the 60% limit, the ratio shall at least be found to have "sufficiently diminished and must be approaching the reference value at a satisfactory pace"....
- Exchange rate stability: Applicant countries should not have devalued the central rate of their euro pegged currency during the previous two years, and for the same period the currency stability shall be deemed to have been stable without "severe tensions". As a third requirement, participation in the exchange-rate mechanism (ERM / ERM II) under the European Monetary System (EMS) for two consecutive years is expected,...
- Long-term interest rates (average yields for 10yr government bonds in the past year): Shall be no more than 2.0 percentage points higher, than the unweighted arithmetic average of the similar 10-year government bond yields in the 3 EU member states with the lowest HICP inflation (having qualified as benchmark countries for the calculation of the HICP reference value). If any of the 3 EU member states in concern are suffering from interest rates significantly higher than the "GDP-weighted eurozone average interest rate", and at the same time by the end of the assessment period have no complete funding access to the financial lending markets (which will be the case for as long as a country is unable to issue new government bonds with 10-year maturity – instead being dependent on disbursements from a sovereign state bailout programme), then such a country will not qualify as a benchmarkcountry for the reference value; which then only will be calculated upon data from fewer than 3 EU member states...
Source Wikipedia https://en.wikipedia.org/wiki/Euro_convergence_criteria#Criteria
Eurozone countries have the most problems with criteria Nr. 3. 60% gov debt-to-GDP ratio
Non-€-area EU countries however mostly fulfill 60% gov debt-to-GDP ratio
That sounds strange at first, that weaker non € EU countries, which never had reached the goals to be part of €-Zone with Maastricht criteria or didn't want become part of that, fullfill 60% gov debt-to-GDP ratio often easy or are in a very good direction for that goal:
https://en.wikipedia.org/wiki/Euro_convergence_criteria#Fulfillment_of_criteria
https://en.wikipedia.org/wiki/Euro_convergence_criteria#Fulfillment_of_criteria
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| source: http://www.tradingeconomics.com/euro-area/government-debt-to-gdp |
What could be the background reason of that?
The most obvious ideas are,
- The fact that Non € EU states are adhering to agreements and long-term prospects of european union too join in 1 decade €-zone, if it survives the next 5 years.
- Non € EU states simply have quite real problems / difficulties to borrow more on the international financial markets for gov debts at favorable conditions and so they simply just do not make it.
Southern €-area states Portugal, Spain, Italy, Greece have most problems with 60% gov debt-to-GDP ratio
We see, that Portugal, Spain, Italy, Greece (a bit Cyprus too, but Malta not) have it incredibly hard to match the 60% gov debt-to-GDP ratio and furthermore everything goes there in wrong direction.
Ireland also exceeded the 60% gov debt-to-GDP ratio far by a very wide margin, but we see below a development again in Ireland to the appointed / agreed direction.
