17 March Ecofin

Date: 20/03/1997

FINANCE ministers examined the convergence programmes of the French and German governments, and gave them both the green light. In the case of France, ministers formally welcomed the “structural reforms and the retrenchment of the role of the state” presented in its revised 1997-2001 programme. They called on Paris to continue its policy of reforming the labour market and the social security system, both to reduce unemployment and to take account of the costs of an ageing population. The plan included a series of budgetary and inflation targets based on various economic scenarios. For their part, the German authorities gave only one central target for inflation and budgetary control. Their representatives claimed that coming up with different scenarios could send out the wrong signal to the markets at a difficult time, although some ministers said they would have preferred a scenario-based programme. Officially, the Council issued a statement welcoming the objectives of the German plan and claimed that its forecasts were entirely realistic.

BUDGET Commissioner Erkki Liikanen presented ministers with a report on the state of play in the SEM2000 initiative, a programme aimed at improving financial controls on EU spending. Ministers will scrutinise the progress of the scheme again in June. Dutch Finance Minister Gerrit Zalm, who chaired the meeting, said the fact that the Court of Auditors was unable to give ministers the Union's 1995 annual accounts showed “the need to make progress on SEM2000”.

DURING lunch, German Finance Minister Theo Waigel and his French counterpart Jean Arthuis briefed other ministers on the conclusions of their meeting last week in Lyon. They told fellow finance ministers that a 'stability council' should be established once economic and monetary union was under way, but stressed that it should be “informal” and club-like. It would be a forum for exchanging information and coordinating policies, but it would not challenge the independence of the European Central Bank in setting monetary policy.

A REPORT from mint directors on problems surrounding the production of euro and cent coins was discussed, but no conclusions were reached. The first question put to ministers was whether the edges of any of the coins should be rough to help the blind and partially sighted. Zalm said no strong feelings had been expressed on this either way. Ministers also discussed whether to reduce the content of nickel in the coins, as requested by the Swedish delegation. Finally, a nine-sided coin upset some ministers, who pointed out that they only had round coins in their countries and were worried about the problems this might pose for vending machines.

MINISTERS held a debate on the financial impact of the crisis in Albania. They agreed that the situation was still too uncertain to consider the provision of balance-of-payments aid or help with restructuring the economy, but advancing humanitarian aid was possible and desirable. Zalm said that, once the crisis was over, the EU would work together with the International Monetary Fund and the World Bank to provide structural funding and grants to the country.