8 July Ecofin

Date: 11/07/1996

IRISH Finance Minister Ruairi Quinn outlined Dublin's aims for his presidency of the Council of economic and finance ministers (Ecofin). Quinn said he intended to have “substantive conclusions” ready in time for the December European summit in Dublin on the formation of a budgetary 'stability pact' for members of the economic and monetary union, an exchange rate system binding those outside the EMU to those inside and a legal framework for the Euro. Approaches to nurturing employment, fighting fraud and harmonising taxation will also be presented to the Dublin summit.

ONCE the presentation of the programme and a short debate on its contents was out of the way, the meeting concentrated on the formal adoption of the findings of the European Commission and the EU monetary committee on this year's excessive deficit procedure. Of the 15 member states, only three - Luxembourg, Ireland and Denmark - were found to have met the Maastricht Treaty's budgetary targets. All the rest were censured for running up excessive deficits and a series of recommendations were adopted to put them right.

FRANCE published Ecofin's recommendations, which suggest that Paris presents a new convergence programme covering 1997 and beyond. Finance ministers welcomed the efforts already made in Paris to cut public spending, especially the reductions in the 1997 budget which had been brought forward into 1996. The German government was also asked to devise a new programme to show how its public sector deficit will be cut from 3.6&percent; this year to the 3&percent; required for entry into the monetary union. Finland and Belgium were encouraged to get their deficit below 3&percent; in 1997 to bring the ratio of public debt to GDP closer to 60&percent;, while Sweden was told that it should be highly ambitious to compensate for its unusually high exposure to external factors.

FINANCE ministers approved the convergence programme presented by the Austrian government, but stressed that further work was needed to stabilise and then reduce public sector debt.

“It is in public finances that imbalances remain too large and convergence efforts are required,” declared the conclusions of the meeting. Ministers called upon Vienna to develop a “medium-term budgetary strategy aiming for a faster decline in the deficit in 1998 and beyond, thus creating greater room for manoeuvre for budgetary policy and ensuring a more marked downward trend in the debt ratio”.

UNABLE to reach agreement on whether or how to finance Trans-European Networks, ministers chose to postpone a decision. Luxembourg Prime Minister Jean-Claude Juncker suggested the creation of a high-level working political group to resolve the dispute between key finance ministers and the Commission, sparked by a request from Commission President Jacques Santer for an extra 1 billion ecu to be spent on funding the projects. Ministers agreed to Juncker's proposal. The group will analyse the financing needs of some of the 14 priority TENs projects and report back in September.