Brussels, 15/02/2011 (Agence Europe) - On Tuesday 15 February 2011, EU finance ministers did not make much progress in the talks on the package of draft EU rules to boost economic governance in Europe. All that has been achieved is that they have agreed on technical issues relating to revenue windfalls in the changes to the preventative arm of the Stability and Growth Pact. On Tuesday 14 February 2011, the chair of the ECOFIN Council, György Matolcsy, said that they had managed to settle one issue (of the eleven outstanding) but repeated the Hungarian Presidency's desire that agreement in principle will be reached in the middle of next month so that the legislation can be decided upon with the European Parliament by June.
A diplomat commented that the discussions on Tuesday had been vital to ensure all delegations had a proper briefing but important issues remain on the table. For example, how to decide on the scale of reduction of public debt and increases of expenditure not covered by extra tax income. Federal countries have problems with the new EU budget rules and the duty to consolidate accounts is disliked by Germany and Spain.
Progress has been made on the trajectory for reducing excessive public debt (defined as above 60% of GDP) based on a proposal from the European Commission suggesting a 5% reduction each year. Italy and Greece, the two most-indebted eurozone countries in terms of percentage of GDP, have their reservations about this. Italian Finance Minister Giulio Tremonti might go along with the target of a 5% reduction a year after 2014 but argues that other issues need to be calculated, like household debt. Greece says that its structural adjustment programme negotiated in return for international aid does not include a debt reduction trajectory. Greece also raised the question of debt maturity. These issues will be covered by the legislation revising the corrective arm of the Stability and Growth Pact that the Council of Ministers has to decide upon in a unanimous vote.
No progress has been seen on what to do with the monies raised by fining countries that infringe the Stability and Growth Pact. Estonia refuses to accept the idea that the cash should go to the EFSF (a fund created in 2010 to bail out the eurozone). Slovakia wants the fines to be paid into the EFSF and be used to reduce the amount that eurozone countries contribute to the fund. (M.B./transl.fl)