The provisions of the Stability and Growth Pact have been considerably eased in March 2005, upon pressures from the euro area Member States that have had serious problems for the past few years reducing their budget deficits to a level below 3% of GDP. The reform of the Pact points to the weakened mechanisms that discipline the budgetary policy of EU countries. Now, they gain more freedom as regards determining the deficit reduction rate. As a result, the risk of excessive deficits prevailing for longer time periods occurs, which may in consequence lead to an increase in the public debt level. These factors may adversely impact the standing of public finances in the euro area and other EU countries.