Dáil Éireann - Volume 503 - 20 April, 1999

Written Answers. - ECOFIN and EURO II Meetings.

91. Ms Shortall asked the Minister for Finance if he will report on the meeting of ECOFIN and EURO 11 in Brussels on 15 March 1999; and if he will make a statement on the matter. [10200/99]

Minister for Finance (Mr. McCreevy): The Euro 11 meeting held on 15 March 1999 had an initial discussion on a proposal from the European Central Bank, ECB, that, in order to facilitate the final testing of financial market systems to ensure Year 2000 compliance, there should be full closure of all financial markets on 31 December 1999. The meeting also had a general discussion on the economic situation and outlook and the German Presidency updated the meeting on the implementation of the conclusions of the Vienna European Council on the External Representation of the Community at G7 meetings.

The agenda for the meeting of Economic and Finance Ministers, ECOFIN, held on the same day consisted of the following number of issues. ECOFIN considered the progress of Agenda 2000 negotiations, focusing on agriculture and financing issues. I joined with the majority of Finance Ministers in welcoming the progress that had been made at the Agriculture Council the previous week. However, several Ministers were anxious to secure further savings to offset the higher than expected cost of the agricultural package. Overall, the discussion was a frank and useful one which helped to prepare the ground for the Berlin European Council.

Regarding the implementation of the stability and growth pact and Stability Programme of Spain (1998-2002) the Council examined Spain's stability programme. The Council considered that the medium term macroeconomic scenario presented in the programme was achievable, based on structural reform, a stable monetary framework within the euro area, and sound budgetary consolidation. The Council opinion was adopted.

Regarding the Stability Programme of Belgium (1999-2002), the Council examined Belgium's stability programme. The Council considered that the underlying budgetary position in Belgium was sufficient to provide a safety margin to prevent the deficit from breaching the 3 per cent of GDP threshold as a result of cyclical fluctuations. However, the Council noted that fiscal consolidation needed to be pursued beyond the horizon of the programme in order to ensure the debt [535] ratio continued to fall, and to respond to longer term issues, in particular those stemming from the ageing of the population. The Council opinion was adopted.

Regarding the Stability Programme of Germany (1998-2002), the Council examined Germany's stability programme. It noted that the envisaged medium-term deficit objective of 1 per cent of GDP would be sufficient to allow automatic stabilisers to work in a normal cyclical downturn without any large risk of breaching the 3 per cent of GDP reference value. However, the Council considered that the German authorities should aim to reduce the difference beyond the projected level at the end of the programme period when growth is projected to have picked up. The Council opinion was adopted.

Regarding the Stability Programme of France (1998-2002), the Council examined France's stability programme. It noted that the macroeconomic scenario presented realistic GDP growth assumptions close to growth potential and past performance. It commanded the fact that the government deficit reduction over the period of the programme was entirely attributable to the expected reduction in Government expenditure. However, the Council considered that the safety margin provided by the programme should be wider in order to accommodate unforeseen developments such as the uncertain budgetary impact of major structural reforms. The Council opinion was adopted.

Regarding the Stability Programme of Luxembourg (1999-2002), the Council examined the stability programme of Luxembourg. The Council noted that the good performance of the economy and sound policies have been the basis for the healthy state of the public finance in Luxembourg. It commended the approach taken by the Luxembourg Government to sound public finance management, structural reform and other policy measures. The Council opinion was adopted.

Regarding the preparation of the 1999 broad economic policy guidelines, the Council held a further orientation debate on the policy issues to be dealt with in the broad economic policy guidelines. The debate focused on the structural aspects of economic reform, in the light of reports from the Commission and from the Economic Policy Committee. These reports recommended a number of priority areas for attention including reforms in goods, services and capital markets, labour market developments and fiscal sustainability. I welcomed the reports, which in a number of cases focused on issues highlighted in our own Structural Reform Report.

On the Report of the Court of Auditors for 1997, the Council took note of a presentation by the President of the Council of Auditors outlining the main features of the Court's annual report on the implementation of the 1997 budget. Council also adopted a recommendation to the European [536] Parliament on the discharge to be given to the European Commission for the implementation of the 1997 budget. The Council made a number of comments accompanying this recommendation which emphasised its commitment to protecting the financial interests of the Community through combating fraud and promoting sound and effective financial management.

On the fight against fraud and the establishment of a european fraud investigation office, Council agreed a set of conclusions concerning the establishment of a new European fraud investigation office. These conclusions support the establishment of an office which is independent in its operation, and which is capable of both internal investigations with the Community institutions and external investigations within the member states.

Council discussed the issue of duty free, taking note of certain measures proposed by the Commission to tackle the problems which the abolition of duty free on 1 July 1999 would cause. The Permanent Representatives Committee was asked to examine the Commission's proposals and to report on them at a later stage.

On the taxation on savings, Council took note of an interim oral report from the Commission on discussions held with third countries on a possible international application of the principles underlying the draft directive on savings. The Council agreed that work on the draft directive should be accelerated with the aim of reaching political agreement by the Helsinki European Council.

The Council took note of an interim report on the issue of energy taxation, and asked the competent bodies to pursue work on the basis of the report of ECOFIN to the Vienna European Council.

The Council noted a presentation by Commissioner Monti on the proposal for a directive allowing member states to impose a reduced VAT on certain labour-intense services for an experimental period, and asked the competent bodies to examine the proposal and to report back to it in due time.