Brussels, 06/11/2000 (Agence Europe) - The Ecofin Council that will gather this Tuesday morning (it will end following the lunch) under the Presidency of the French Minister for Finance, Laurent Fabius will host, for the most part, strategic guideline debates in view of the European Council in Nice and, even, that of Stockholm. EUROPE recalls that this session is preceded, Monday evening, by a working dinner of the Eurogroup during which various points of the Council agenda have already been raised (see EUROPE of 4 November, p.5). The Council will be informed of the Eurogroup's works, during its Tuesday lunch. In this informal setting, the Fifteen will also be able to raise the issues linked to the IGC (notably the possible extension of qualified majority voting to articles relating to EMU), macro-financial assistance to the Balkans and the preparation of dialogue with the oil producing countries that will take place during the meeting scheduled for Riyadh next 17 November. As for the informal session, below is an overview of the points on the agenda:
1) Financing of enterprises. Two aspects will be raised: a) the implementation of the action plan on capital investment. The interim report drawn-up by the Commission on this issue will be examined by the Ministers. EUROPE recalls that the Commission reviews the progress achieved in the implementation of the strategy for the development of the capital investment market in the light of the deadlines set by the European Council: the action plan should be fully applied at the latest by 2003. For the Commission, the implementation in satisfactory time of the action plan on financial services should give a decisive boost to the integration of the European capital-investment market; b) Analysis of Community financial instruments aimed at SMEs. In the light of another report by the Commission that reviews all of the existing instruments (including those of the EIB and the EIF) the Council will adopt Conclusions. It will not doubt underline, among others, the need to free more venture capital at the incubation stage of companies (in particular ion the "new economy" sector).
2) Structural performance indicators: an instrument for structural reforms: The Council will seek to find a consensus on the report to be handed to the European Council in Nice on the indicators to be adopted at the EU level to assess with the greatest reliability the progress achieved in the key objectives of Lisbon: state of structural reforms, progression towards full employment, new technologies, level of social cohesion… To this effect, the Minister have at their disposal a report by the Economic Policy Committee (EPC) whose main elements will be present by its President, Normam Glass; they will also hear Pedro Solbes present to them the Communication that the Commission adopted on the same issue last 27 September. The EPC report supports 50 indicators, against 33 for the Commission. This difference is explained by the fact that the Commission exclusively worked in view of the European Council in Stockholm (that will assess the follow-up to be made to the Lisbon Conclusions, Nice only being, on this level, a stage) while the Economic Policy Committee will have broached the exercise in a wider framework, with a triple level: - European Council in Stockholm; - indicators required for preparation of broad economic policy guidelines (which are no longer based, for more than ten years, mainly on five of the Maastricht convergence criteria); - programming of action by various Council formations (the EPC is working in close collaboration with the Commission and other Council formations, but the coordination with the High Level group for social protection is only at the preliminary stages) it will be for the Ministers and Commissioner Solbes to bring the points of view held by the two institutions over fifteen possible indicators.
3) Public finances. In view of the European Council in Stockholm, the Council will be called upon to give guidelines on the basis of two interim report relating to: i) Contribution of public finances to growth and employment. On the basis of another report by the Commission, the ministers should mainly endorse four criteria identified with a view to allowing the Member States to take reforms leading, in time, to sound and lasting budgetary positions. EUROPE recalls that the criteria put forward by the Commission are as follows: - the Member States must achieve or set on track the medium term objective of budgetary surplus or near balance; - reforms must take into consideration the cyclical situation and must not be pro-cyclical; - the level of the public debt and long term budgetary sustainability must be taken into account; - tax reductions must be part of a package of global reforms. Such criteria hide an iron hand between the Commission, so apt at making a strict interpretation of the priority for improving public finance, and certain Member States which prefer to have a margin for tax reduction. The Member States should hold a first substantive discussion on the relevance of such criteria or, at least, on their more or less binding nature. By way of example, a strict application of the first criterion would have prohibited the tax reform decided in Germany since, in an initial phase, it will cause a worsening of the budgetary situation. ii) Financial consequences of population ageing. The ministers will carry out an exchange of views on a progress report by the Committee on Economic Policy which predicts, for all Member States, pressure on the financing of their public retirement systems, whatever the level of their economic growth. On this basis, the Council is expected to give the EPC guidelines for the continuation of work and, above all, invites it to look at the consequences of ageing on health spending (and therefore, consequently, on the lasting improvement of public finances), as well as on the ways that should be explored to adjust systems that already exist in member States, while respecting the principle of subsidiarity.
4) Exchange strategy for applicant states. The Council will adopt Conclusions that take on board the essential part of the report intended for the Nice Summit. Elaborated by the Economic and Financial Council in close collaboration with the European Central Bank, this report - which is based on the principle that all candidate States hope to become members of the euro area if they meet the convergence criteria - identifies three stages in the transition process towards adoption of single currency: - pre-accession: There are no formal restrictions on the choice of exchange policy, but applicant countries must focus on structural adjustment and micro-economic reform; - accession: for the new Member States, exchange policy is becoming a subject of common interest, but these states could keep their exchange regime; - adoption of the euro: the new Member States join the exchange mechanism and, in time, implement procedures necessary to meet convergence criteria.