ABSTRACT
In the Maastricht Treaty problems regarding public finance are considered in particular with reference to the definition of an excessive deficit. In fact, Article 104C sets the conditions which a country must respect in order to join Monetary Union, while the actual figures are defined by the Protocol on the procedure for excessive deficits, which calls for: ‘3% for the ratio between real budget deficit, forecast and current, and gross domestic product at market prices; 60% for the ratio between public debt and GDP at market prices’. It is clear that this aspect of the Treaty is particularly relevant and political debate and public opinion has focused mainly on these criteria. In fact, we can justify setting a value equal to 3 per cent of GDP for the deficit by referring to the ‘golden’ rule of public finance, on the basis of which current expenditure must be financed by current revenues, while investment spending can be financed by debt. In fact, in the period from 1974 to 1991 public investment in Europe was equal on average to 3 per cent. In reality, this condition of the Maastricht Treaty reflects, on the one hand, a condition that is widespread in local finance systems, where debt-destined to finance investment spending-cannot normally exceed certain levels; on the other hand, it avoids the formation of excessive deficits without linking the financing of the deficit through bonds to the distinction-in large part ambiguous and distorting-between current expenditures and investment expenditures.
