By Jan Strupczewski

BRUSSELS, (Reuters) – The European Union launches a discussion on Tuesday about a fourth revision of fiscal rules called the Stability and Growth Pact. These are the financial rules that underpin the Euro currency’s value.

Although the pact may be complex, it is based on two fundamental principles. A country must have a maximum limit to its national budget deficit and a maximum limit to its total debt. Here are some key dates from its turbulent past.

1992 – EU member countries sign the Treaty of Maastricht. This establishes a ceiling on national budget deficits of 3% and debt of 60% of national production.

1995 – Theo Waigel (German Finance Minister) proposes to countries that adopt the euro toughen their rules regarding budget deficits, and place financial sanctions on those who violate them.

1997 – The Stability and Growth Pact Rules are formalized as regulations to allow governments to coordinate their fiscal policies in the soon-to be-launched Monetary Union.

1999: The introduction of the euro currency in an historic time for European integration is met with great celebration.

2002 – Three years later, the first serious challenge to the credibility of the pact is presented by France and Germany as they have deficits exceeding the limit of 3%. They’re asked to reduce them.

2003 – The deficits in France and Germany continue to rise above the limit, rather than falling. The Commission asked the EU council of finance ministers, effectively a collective of all EU national capitals, to authorize harsher discipline against Paris and Berlin. However, the countries form a bloc and block tougher actions against each other.

2004 – European Commission sues Council of finance Ministers over blocking of pact rules. But it wins partly on procedural grounds.

2005 – In the aftermath of the crisis, the EU changes the rules. Importantly, the new goals allow for more freedom to national capitals in order to take into account both structural and cyclical aspects of their deficits. The government has more time to reduce excess gaps, and can be disciplined only for temporary or minor violations.

2011 – The rules have been reformed amid a sovereign debt crisis that erupted after Greece concealed its dire financial situation from the pact monitors. The so-called six-pack, named for the six regulations which broaden penalties and introduce debt-cutting and spending limits.

2013- While still reeling from the sovereign credit crisis, and determined to avoid another one, the EU updates the rules through two more regulations. This time, it is called the “two pack”. One major difference is that each year, by October 15, the EU amends the rules to require euro-zone governments to submit to the Commission their main assumptions about the next year’s budgets. This will allow the Commission to verify whether the estimates are consistent with EU guidelines.

Otherwise, they can be compelled to create a new budget.