(BRUSSELS) - The European Commission said on Wednesday that disciplinary deficit action should be lifted against Italy, Portugal, Slovakia and the Czech Republic, judging they have sufficiently improved their finances.

If EU finance ministers rubberstamp the decision in June, only Poland and Hungary will be subject to so-called excessive deficit action and all eurozone countries will be out of the deficit doghouse for the first time since 2002.

The commission's conclusions were evidence for EU Economic and Monetary Affairs Commissioner Joaquin Almunia that sound management of the public accounts pays off.

"Not only have deficits been corrected, to the point that not one single euro area country is presently under close surveillance, but they are also being corrected through significant structural measures," he said.

Most European governments have made big strides in recent year in cleaning up their finances, reversing a trend budgetary laxism at the start of the decade.

At the time, many EU governments, including heavyweight France and Germany, struggled to meet European rules requiring the shortfall between revenues and spending to be kept to less than three percent of output.

For Slovakia the recommendation to drop disciplinary action came on top of more good news from the commission, which deemed the country ready to adopt the euro in January 2009.

The principle of the rule that the so-called public deficit covering state, local and welfare budgets, must not exceed 3.0-percent of output was that this should be a hurdle for joining the eurozone.

Thereafter eurozone countries should work their way into surplus in times of growth so that their margin for using public finances as a cushion against setbacks such as recession would be any surplus plus up to 3.0 percent of deficit.

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