17 February Ecofin

Date: 20/02/1997

FINANCE ministers held a curtailed meeting after several issues were taken off the agenda at the last minute. It began with a presentation by Economics Commissioner Yves-Thibault de Silguy of his proposals to aid Georgia, Armenia, Tajikistan and the Former Yugoslav Republic of Macedonia (FYROM). Ministers agreed to provide 170 million ecu to the three former Soviet republics over 15 years and also to increase the grant element. Out of the 15-year balance of payments loan, 10 million ecu in 1997 will be a grant and will be followed by 17 million ecu per annum over the next five years. These annual grants will only be paid if economic reforms in the countries concerned remain on track. De Silguy also asked ministers for a mandate to take to a pledging conference next week for FYROM, hosted by the Group of 24 creditor nations and the World Bank. The Commission will pledge 40 million ecu as a balance of payments loan. These proposals will now go to the European Parliament for ratification.

MINISTERS gave their approval to the Belgian government's 1997-2000 'convergence programme', aimed at bringing the country's economy into line with the best practice in Europe. In their conclusions, ministers said the plan was “credible and adequate to the particular public finance conditions of Belgium and well adapted to the institutional structure of the state”. They called on the Belgians to use any windfalls to reduce the ratio of public sector debt to national income, which is still above 130&percent;.

MOST of the meeting was devoted to a round-table discussion on the European economy, based on the Commission's annual economic report, and two oral reports from the monetary committee and the economic policy committee. De Silguy told ministers his staff were expecting the EU economy to grow by 2.3&percent; this year and 2.8&percent; in 1998 - a rate which would not be enough to make a serious dent in the unemployment figures. This was followed by similar messages from Monetary Committee President Sir Nigel Wicks and European Monetary Institute President Alexandre Lamfalussy.

UK FINANCE Minister Kenneth Clarke gave his views on why the British economy had been able to sustain economic recovery for five years - a fact that was praised in the Commission's report. German State Secretary for Finance Jürgen Stark, who was standing in for an absent Theo Waigel, told ministers about the unemployment problem in his country, but stressed that the recent rise in the US dollar would help exporters. Italy's Carlo Azeglio Ciampi pointed out that the American economy was in a fortunate position compared with Europe. The prodigious development of information technology and the widespread use of communications had meant that the US economy was uniquely placed to generate high-value-added jobs in a recovery.

DUTCH Finance Minister Gerrit Zalm, who chaired the meeting, made a virtue of the fact that ministers had so little business to discuss. “We did not have much on the agenda but that was pleasant because it gave us more time to talk about the economic situation,” he said.