"There's a stability and growth pact which was agreed for the eleven countries which tries to limit the size of budget deficits among the eleven countries"

The quote by Robert C. Solomon is describing the Stability and Growth Pact (SGP) which was concurred upon by the eleven nations of the European Union in 1997. The SGP is an agreement between the countries to restrict the size of their budget deficits. This is done by setting a limitation on the quantity of deficit each country can have as a portion of their Gross Domestic Product (GDP). The SGP likewise needs nations to have a budget deficit of no greater than 3% of their GDP and a debt-to-GDP ratio of no greater than 60%. The SGP is an important part of the European Union's efforts to maintain financial stability and economic growth. It is developed to guarantee that nations do not spend too much and put themselves in a position of financial problem. The SGP is also meant to promote fiscal discipline and prevent nations from taking on too much debt. By restricting the size of budget deficits, the SGP assists to ensure that nations are able to preserve a healthy economy and avoid recessions.