The fiscal compact denotes the fiscal rules set out in Title III of the Treaty on Stability, Coordination and Governance in the Economic and Monetary Union. For the EU Member States that have signed the treaty, these rules require the general government budgetary position to remain at least broadly balanced, rather than showing a deficit. They form part of the treaty framework for coordinating national fiscal policies and maintaining budgetary discipline.
Source: European Central Bank (ECB) (source). This glossary entry is an independently worded adaptation of the cited information.