7July Ecofin

Date: 10/07/1997

FINANCE ministers opened their first meeting under the presidency of Luxembourg Premier Jean-Claude Juncker with a televised debate on his six-month programme. In a broadcast speech, Juncker said that his priorities would be: preparing the transition to a single currency, common taxation, employment, future financing of the Union's activities, prudential supervision of financial institutions and establishing who will represent the EU in foreign financial policy.

MINISTERS gave conditional approval to the convergence programme of the Italian government for 1998-2000. They welcomed the “remarkable progress” made by the Italians in bringing their economic performance towards the best levels in the Union, particularly regarding inflation, interest rates and currency stability. They “noted with satisfaction that the programme foresees a progressive and resolute reduction in the public deficit in a manner intended to achieve fundamental changes”. Ministers did not endorse Rome's prediction that it would meet the EMU entry criteria by cutting the deficit to 3&percent; of gross domestic product, but instead welcomed the government's commitment to do this. In a veiled criticism, ministers called on the Italian authorities to treat all their deficit targets as ceilings and suggested that their assumptions regarding big falls in interest rates could be a little optimistic.

FOLLOWING on from last month's Amsterdam summit, ministers noted the presidency's commitment to implement its conclusions on employment. In concrete terms, this means work on preparing for a special jobs summit in November.

MINISTERS took note of the technical work undertaken to establish whether or not enough capacity existed to make euro coins with the nickel substitute 'Nordic gold'. They gave their backing to a European Commission proposal on the unitary values and technical specifications of the coins and said that the formal decision on this text would be made once it was known which countries would join the euro-zone.

THE Council formally adopted the regulations agreed in principle at the Amsterdam summit as the basis of the 'stability and growth pact'. The first regulation reinforces the surveillance of member states' budgetary standing within economic and monetary union (EMU) and establishes an 'early-warning system' if a country starts to go off the rails. A second accelerates the penalty procedures if it remains in trouble. Related resolutions agreed at the summit on how the pact should be interpreted, committing member states to job creation and outlining how the euro will be linked to non-participating EU currencies will be published in the Official Journal of the European Communities, ministers decided.

FINANCE ministers then held a 'structured dialogue' session with their counterparts from central and eastern Europe. The debate focused on the liberalisation of capital movement and financial sector reform, and examined progress made since the previous meeting in October 1995. The Czech Republic, Slovakia and Poland commented on their experience in these areas and several other countries presented their views. At the end of the meeting, ministers agreed that “effort must continue in order to consolidate the positive results and to accelerate the integration of these countries into the Community and international economic and financial system”.