Debt Sustainability Monitor 2025

The Debt Sustainability Monitor (DSM) plays an important role in identifying fiscal sustainability risks in EU Member States, based on the latest available information. Part I of the report assesses risks in the short, medium and long term, and discusses a wide range of additional risk factors. These various approaches complement each other and lead to an overview of fiscal sustainability risks from different angles, by identifying their timing, nature and size. The 2025 DSM is based on the Commission 2025 autumn forecast (1) and incorporates the ageing cost projections from the 2024 Ageing Report, which was jointly prepared by the Commission and the Economic Policy Committee. The assessment of short-term developments takes into account information up to 31 December 2025. Methodological details are available in the annexes, ensuring transparency. The DSM is descriptive, not prescriptive; its findings are a crucial input to the European Semester. The DSM does not make recommendations on what fiscal policy should do but assesses the implications of unchanged fiscal policy for the debt dynamics over the medium term, through its debt sustainability analysis (DSA). The DSM also gauges the long-term impact on debt of the projected change in ageing-related expenditure, given the initial budgetary conditions. On that basis, the findings of the DSM, including the country-specific overviews (Part II of the DSM), are an important input to guide policies under the European Semester. In particular, they can serve as analytical underpinnings to country-specific recommendations related to pensions, healthcare and long-term care. The role of the DSA has expanded with the reformed EU fiscal framework, in that case for a normative use. With fiscal sustainability at its core, the new framework gives the Commission’s DSA methodology an increased role in EU fiscal surveillance, as the anchor to compute prior guidance and assess Member States’ medium-term plans. The DSA-based methodology can also have a role in certain procedures, for instance to ensure that activating the national escape clause preserves fiscal sustainability and to compute corrective paths under the excessive deficit procedure. While the methodologies used in the DSM and for the EU fiscal framework are closely linked, their aim differs substantially. The standard DSA of the DSM assumes unchanged policy, taking the budgetary position as given, and assesses the risks it implies for fiscal sustainability. Under the EU fiscal framework, the approach is reversed to define fiscal adjustment paths so that fiscal sustainability is ensured. Chapter 5 is dedicated to topics related to the EU fiscal framework.