The task force, made up of the EU's 27 finance ministers, will thrash out proposals on Monday (18 October) to reform the bloc's economic governance in the wake of the Greek debt crisis.
The group, chaired by European Council President Herman Van Rompuy, wants tougher rules to prevent debt levels from spiralling out of control and proposes introducing sanctions for countries who fail to reduce them.
The group's final draft report, obtained by EurActiv, reveals broad agreement among EU countries on how to strengthen budget discipline but leaves unanswered questions on treaty change to accommodate tougher rules, demanded by Germany.
In a move likely to accommodate the wishes of the UK and France, the report says the new rules will apply in a two-stage approach, with the more stringent ones applying to the 16-member euro zone.
The first stage will see interest-deposits and fines introduced "only for the euro area". In a second stage, strengthened enforcement measures will be implemented "for all EU member states, except the UK" and "as soon as possible," according to the draft.
An EU source said the report was very close to the final version Herman Van Rompuy will present to leaders at a summit on 28 October.
Focus on debt
The ministers agree that both rising deficits and debts should be a cause for concern, whereas previously the EU's Stability and Growth Pact focused exclusively on countries with deficit levels that rose above a 3% ceiling.
"More attention should be given to the interplay between deficit and debt," which is capped at 60% of GDP under the Stability and Growth Pact, says the document.
"Therefore bringing the deficit below 3% of GDP should not be sufficient for the abrogation of the EDP [excessive deficit procedure] if the debt has not been put on a satisfactory declining path," according to the draft.
The method to calculate a country's debt and adjustment path will be set out later in separate legislation to be proposed by the European Commission.
The task force also endorsed plans for an interest-bearing fine on countries with high debts, an idea which was unveiled in a European Commission proposal two weeks ago. According to the plans, a country which fails to reduce its debts after six months would also stop receiving the interest on the penalty.
In addition, the paper supports the creation of a scoreboard of macro-economic indicators, such as productivity, unit labour costs and employment levels, to uncover problems at an earlier stage.
The report also foresees "new reputational and political measures" to ensure stricter compliance, such as "on-site monitoring via a mission of the European Commission, in liaison with the ECB [European Central Bank] for euro area member states". Those missions should be followed by a report to EU leaders "that may be made public".
The paper, however, ducks crucial questions on whether some proposed sanctions for indebted countries would require treaty change or not.
"Other issues have been identified by the Task Force, where discussions were controversial, and where Treaty change would also be necessary, and have thus not been agreed on," reads the document.
The issues in question are a suspension of a country's voting rights as a punishment for rising debts and a reverse majority rule whereby sanctions or fines would stand unless a majority of countries veto it.
The prospect of treaty change still glowers over discussions, as those countries who struggled to get the EU's Lisbon Treaty past their electorate and parliaments - notably Ireland - remain unenthusiastic.
Germany, which has advocated treaty changes to accommodate tougher sanctions, wants to continue talks beyond the task force's lifespan, due to end with the group's final report.
What is debt?
The task force has delegated the question of measuring debt levels and defining imbalances in the bloc to the European Commission.
In vague terms, the task force would factor "debt maturity, currency denominations, reserves, and implicit and explicit liabilities" into the EU's calculations.
The report also begs the question whether the impact of pension reforms should be a factor in determining a country's level of debt.