convergence criteria


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convergence criteria

requirements before a member of the EUROPEAN UNION may adopt the Euro as its currency as part of ECONOMIC AND MONETARY UNION. The criteria are: the ratio of government deficit to gross domestic product must not exceed 3 per cent; the ratio of government debt to gross domestic product must not exceed 60 per cent; there must be a sustainable degree of price stability and an average inflation rate, observed over a period of one year before the examination, which does not exceed by more than 1.5 percentage points that of the three best performing Member States in terms of price stability; there must be a long-term nominal interest rate which does not exceed by more than two percentage points that of the three best performing Member States in terms of price stability; the normal fluctuation margins provided for by the exchange-rate mechanism must be respected without severe tensions for at least the last two years before the examination.
References in periodicals archive ?
The Maastricht convergence criteria have a dual purpose.
One is to allow latitude in the application of the convergence criteria and the other is to view the starting date for monetary union as flexible.
The convergence criteria already have sparked dramatic effects.
They already are, or soon will be, reorienting their monetary policies towards stimulating growth and away from the achievement of the arbitrary convergence criteria. That is not to argue that these countries have given up on their objective of restraining inflation.
''Foreign exchange reserves remained strong (5.7 months of import cover), meeting the CBK's statutory requirement to maintain at least four months of import cover and the EAC region's convergence criteria of 4.5 months,'' CBK said.
Headline inflation stood at 2 percent in March 2019 (year-on-year) and is expected to remain below the 3-percent WAEMU convergence criteria in the medium term.
In its appraisal last year of the budget options for Kenya over the medium term, the Parliamentary Budget Office warned that the government has to reduce its deficit to three per cent of income generated in the country in line with the convergence criteria for East African Community countries.
Diouf said from the Commission's findings, many of the countries were yet to meet the macroeconomic convergence criteria for a single currency set up by the ECOWAS and the West African Monetary Agency (WAMA).
"The convergence criteria are legally defined in the Maastricht Treaty and I know that Bulgaria has made a significant progress in meeting those criteria but hasn't met all of them," he added.
Data for the convergence criteria for individual countries were obtained from the Eurostat, OECD, and IMF databases, or from the statistical offices of the countries under analysis.
On the ECOWAS single currency, the Summit endorsed the recommendations on the convergence criteria, the streamlining of the institutions and the revised roadmap with a specific indication of the institutions in charge of its implementation.
In terms of public finances, Latvia's budget deficit went from 8.1% in 2010 to 1.2% of the GDP in 2012 - this is well below the 3% reference value (convergence criteria).

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