Brussels, 21/01/2015 (Agence Europe) - The Latvian Presidency of the Council of the EU hopes to reach a political agreement in mid-March on the regulation on the European Fund for Strategic Investments (EFSI) to be set up in the framework of the 'Juncker' investment plan.
The legislative work on this dossier has only started at technical level and our aim is to hold a ministerial debate in “mid-March”, the Latvian finance minister, Janis Reirs, told the economic and monetary affairs committee of the European Parliament on Wednesday 21 January. He feels it is vital that the future EFSI be granted the financial rating AAA so as to guarantee a leveraging effect in order to draw down as much private investment as possible. He approves of the neutrality recommended by the European Commission with regard to the Stability and Growth Pact for any direct contributions the member states may choose to make to the fund.
Flexibility of the Pact. The Latvian minister also welcomed the recent Commission communication interpreting the flexibility laid down in the Stability Pact, as this makes “things much clearer for the member states”, whilst avoiding replacing or watering down the existing rules (see EUROPE 11229). He argued that budgetary responsibility and investments go hand in hand. This can be demonstrated by the economic policy applied in Latvia to come out of the financial crisis, Reirs stressed: today, Latvia's economic growth is “among the strongest in Europe” and unemployment has dropped sharply.
According to the European Commission's autumn forecasts 2014, Latvian growth will be 2.6% of GDP in 2014, rising to 2.9% in 2015. Public deficit will rise from 1.1% to 1.2% of GDP between 2014 and 2015, whilst government debt will fall from 40.3% to 36.3% of GDP. In 2010, unemployment stood at 19.5% of the working population and is expected to have been trimmed to 11% in 2014.
When asked about the future of the 'troika' (European Commission, ECB and IMF), the informal body tasked with monitoring the implementation of the bailout plans in the eurozone on behalf of the European creditors, the Latvian minister suggested waiting for the report on Economic and Monetary Union, to be presented by the 'four presidents' (Commission, European Council, ECB, Eurogroup) at the June summit. He declined to reply to a question put by Miguel Viegas (GUE/NGL, Portugal) on the idea forwarded by the Greek coalition Syriza to hold a European conference on government debt.
As for the increase in value of the Swiss franc, which has hit many individual borrowers in Eastern Europe (see EUROPE 11234), Reirs does not feel that this is an area in which the EU has a role to play.
Taxation. Minister Reirs explained that the Latvian Presidency was planning to work on a roadmap on base erosion and profit shifting. “We will support the various proposals once they have been tabled”, he said. The Commission is currently looking at the proposal to bring in an automatic exchange of information on tax rulings within the EU. This will be available in the spring and will be grafted onto the administrative cooperation directive, confirmed the Commissioner for Taxation, Pierre Moscovici (see EUROPE 11228).
“As the Presidency, we will pay particular attention to the financial transactions tax” (FTT), pledged the minister, who hopes to “make life easier” for the eleven states negotiating this FTT in the framework of enhanced cooperation. A French proposal to breathe new life into the talks is awaited shortly, amidst intensive lobbying from the banking industry to ensure that the proposal, already at stalemate, is abandoned altogether.
Monetary funds. In response to a question by Neena Gill (S&D, UK) on the proposed regulation to make monetary funds more solid (see EUROPE 11209), the minister pointed out that despite the progress made under the previous Italian Presidency, the member states have not yet reached a common position. He went on to explain that the European Commission would be asked to prepare solutions to resolve all the outstanding issues. “Once we have this, we will get straight to work”, said Reirs, who stressed that the contradictions could not be ironed out overnight. (MB and EL)