European Union governments set tougher rules on budget deficits in the latest draft of a planned fiscal treaty, bowing to some objections raised by the European Central Bank.

The blueprint, to be discussed on Jan. 23 by EU finance ministers, will require a centralized “correction mechanism” to be triggered “automatically” in cases of “significant” deviations from a target structural deficit of 0.5 percent of gross domestic product, according to the draft dated Jan. 19 obtained by Bloomberg News.

The pact also empowers the European Commission to set deadlines for budgetary convergence. It gives the European Court of Justice the power to fine countries whose balanced-budget laws don't pass muster, while stopping short of the ECB's request that the court more broadly enforce the budget rules.