The finance ministers of the euro area countries will try to reach an agreement on Wednesday 9 October on the outlines of fiscal capacity for the euro area, which will take shape in 2021 (see EUROPE 12327/1).
There is only one major element that still needs to be decided in this discussion, which includes all twenty-seven countries, in order to finalise this budgetary instrument for convergence and competitiveness (BICC) that is designed to support investment and reforms in the countries that will benefit from it.
“We are close to the end”, a European source said on Thursday, 3 October. The issue of "funding” still requires agreement, she added.
In 2021, the euro area budget will be funded through the 2021-2027 multiannual financial framework. A figure of 17 billion euros is doing the rounds, even if the envelope is accepted by the European Council as part of the negotiating box on the EU budget after 2020.
On Wednesday, ministers will have to take a position on the possibility of providing additional national contributions to future fiscal capacity after 2021 on the basis of an intergovernmental agreement (IGA) that will have to be drawn up. At this stage, the Netherlands and the Nordic countries continue to oppose it.
To receive support, a euro area country will have to submit a plan setting out the investments and/or reforms it intends to undertake. It will be up to the European Commission, as part of the 'European Semester' process, to assess the soundness of the plan.
All European aid will incorporate co-financing in addition to the amounts raised by the country involved. Depending on circumstances, such as economic conditions, the level of co-financing of the aid granted may vary upwards or downwards. The question of the criteria that will define these circumstances is an important issue.
According to the source, agreement next week will allow the Finnish Presidency of the Council of the EU to provide a figure for fiscal capacity for the negotiating box for the MFF 2021-2027. It has to provide initial figures for the negotiating box for discussions on the post-2020 EU budget at the European Council on 17 and 18 October (see EUROPE 12328/3).
ECB. The Eurogroup is expected to approve the nomination of Italian banker Fabio Panetta to the post of member of the Executive Board of the European Central Bank (ECB), where he will replace French economist Benoît Cœuré from 1 January 2020. The Eurogroup should also be starting an identical procedure to replace German banker Sabine Lautenschläger, who has resigned, effective from the beginning of November, expressing her disagreement with the recent accommodative monetary policy decisions taken by the ECB during the Draghi era (see EUROPE 12326/1).
Other topics on the Eurogroup agenda include a discussion on banking union in the euro area, particularly in light of the report on the activities of the Single Resolution Board, and a report on the tenth ex-post monitoring mission for the Portuguese rescue plan. (Original version in French by Mathieu Bion)