It clarifies that Member States in the preventive arm of the Pact can deviate temporarily from their medium-term budget objective or from the agreed fiscal adjustment path towards it, in order to accommodate investment, under the following conditions:

Summary for the “investment clause” under the preventive arm of the Pact Member States in the preventive arm of the Pact can deviate temporarily from their MTO or adjustment path towards it to accommodate investment, provided that: their GDP growth is negative or GDP remains well below its potential; the deviation does not lead to an excess over the 3 % deficit reference value and an appropriate safety margin is preserved; investment levels are effectively increased as a result; the deviation is compensated within the timeframe of the Member State’s Stability or Convergence Programme.

Under the preventive arm of the Pact, some investments deemed to be equivalent to major structural reforms may, under certain conditions, justify a temporary deviation from the MTO of the concerned Member State or from the adjustment path towards it.

Countries not having an excessive deficit procedure may deviate temporarily from the MTO or from the fiscal adjustment path towards it, especially in cases of negative growth or large negative output gaps, if they invest directly in projects co-financed by the EU under the structural and cohesion policies (including projects co-financed under the youth employment initiative), trans-European networks and the Connecting Europe Facility, as well as projects co-financed by the EFSI.

The Commission evaluates reforms before recommending to the Council possible temporary deviations from the medium-term budgetary objective (MTO) or the fiscal adjustment path towards it.

Member States having implemented major structural reforms with a verifiable impact on the long-term sustainability of public finances will be allowed to temporarily deviate from the MTO or the adjustment path towards it.