The European Central Bank has warned EU governments to use "realistic" growth forecasts when calculating their budgetary goals and to avoid accounting tricks.
In its July monthly report the ECB cautioned governments against using creative accounting to improve their budgetary positions.
The ECB renewed its plea to euro zone governments to honour their pledges made under the European Union's fiscal stability pact, noting "some worrying developments in the past few months."
"Any temptation to improve artificially the current budgetary position by means of accounting measures should be resisted," the ECB said.
EU statistics office Eurostat this month has ruled against measures undertaken by the Italian government and others to reduce their debt and deficits by securitisation of assets.
EU finance ministers are expected at their meeting in Brussels tomorrow to examine the impact of upcoming French and Italian governments' tax cuts on their stability pact requirements, EU sources and economists said.
This will be the first Ecofin meeting under the Danish presidency, which follows Spain's six-month term.
It is also the first since ministers agreed in Madrid last month that France does not have to meet the 2004 deadline, pledged at the Barcelona summit in March, for reducing its budget to close to balance, unless it achieves economic growth of at least 3.0 per cent in 2003 and 2004.
Since that move, which was interpreted as a weakening of the stability pact on public finances, the French and Italian governments have announced tax cuts which mean they will not balance their budgets by 2004.
The Italian government has also locked horns with the European Commission over its plans to use future tax receipts to bring down future deficits. Angry at the commission's parallel between Italy's budgetary accounting and the Enron scandal, government officials said finance minister Mr Giuliano Tremonti will raise the issue at this week's meeting.
In another sign of mounting pressure on the stability pact rules, the leader of German conservative opposition, Mr Edmund Stoiber, has said that Germany too will be unable to meet the 2004 deadline.
Mr Stoiber, who is given a strong chance of ousting Chancellor Gerhardt Schroeder in Germany's September election, said after EU leaders approved the French compromise at their Seville last month: "We will certainly have to accept a reprimand from Brussels and present a balanced budget in 2006."
Also since last month's Ecofin meeting, the commission has warned it will commence proceedings against Portugal if its government confirms a preliminary European Central Bank report that the budget deficit was 3.9 per cent of GDP in 2001.
Under the stability pact, countries must aim to balance their budgets over the medium term and should not run deficits of more than three per cent of GDP.