After the agreement reached at the Summit in Dublin in 1996, the Pact was adopted at Amsterdam in 1997. Its objective was to ensure that, once the single currency was introduced, the disciplines followed by the member states in terms of budgetary controls would be maintained. The Pact prescribes: deficit ceiling of 3%: the ratio between the public deficit and GDP (gross domestic product) must not exceed the threshold of 3%; debt ceiling of 60%: the ratio between public debt and GDP must not exceed 60%. If the deficit of any country threatens to break the 3% barrier, Ecofin sends an ‘early warning’, which is followed by a recommendation in the case of the ceiling being breached. A system of fines then comes into operation (beginning with 0.2% of GDP) if a country should cross the 3% threshold two times running. Germany received an ‘early warning’ in 2002 and a recommendation in 2003, France a recommendation in 2003.
