Brussels, 13/05/2002 (Agence Europe) - The Ecofin Council welcomed the conclusion of EU negotiations with Chile and encouraged the efforts made by Argentinean authorities for concluding an agreement with the IMF in a "contribution" that will be forwarded to the EU/Latin America Summit on 17 May in Madrid (see EUROPE of 11 May, p.7). European Economy and Finance Ministers stress in the text that Argentine's reform programme should above all be based on: 1) a sound and transparent macro-economic framework "including a realistic and sustainable fiscal strategy at all levels of government as well as sound and consistent monetary and exchange rate strategies"; 2) a properly functioning banking system that "should not bear an unreasonable amount of the costs of the adjustment effort"; 3) an international debt restructuring process in order to allow for the necessary financial relief to achieve long-term sustainability; and 4) strengthening of the institutional framework and the restoration of legal certainty. Ministers, for their part, state: "the EU will explore ways to facilitate trade and, in coordination with the IMF and the World Bank Group, to make technical assistance available, as well as to facilitate debt restructuring". We recall that the Council is currently examining proposals aimed at increasing, at the request of Buenos Aires, the quotas for quality beef imported from Argentina, concessions to which France, Austria, Ireland and Belgium are rather hostile (see EUROPE of 8 May, p. 16).
The Ecofin Council's contribution will, moreover, give a wide view of the economic situation and of the challenges facing Latin America. Ministers note that the impact of the Argentinean crisis is "much more limited than initially feared", thanks to the "maintenance of a prudent stance in both monetary and fiscal policies" in most countries. Growth should remain at around 1% in 2002 for the region as a whole, and reach 3-3.5% in 2003. Noting that the budgetary framework of most countries remains, however, fragile, the ministers "underline the importance of persevering with the fiscal consolidation efforts, including by appropriate expenditure control, reducing the sensitivity of fiscal outcomes to changes in international commodity prices".
Ecofin's contribution, moreover, highlights the social inequality that continues to prevail in the region and suggests increasing spending on education and basic health care, and introducing a progressive taxation system, land reforms and reform of the labour market. "The EU will continue to support the implementation of appropriate reform measures and the fight against poverty in Latin America through the array of financial and technical assistance instruments at its disposal", say the Ecofin ministers.
"The EU considers effective crisis prevention as a top priority for the region as a whole", the ministers also note, urging for the development of global capital markets, based on the implementation of common standards in the statistics, monetary, financial and tax transparency field. In addition, "the EU considers private sector involvement a standard element of crisis resolution".
Ecofin ministers restate the EU's support for regional integration processes, stressing that "regional economic cooperation will be a key element in the future economic development of the region". While noting that "unfortunately, progress towards a common market within Mercosur seems to have slowed down in recent years", they support the development of cooperation between Mercosur and the Andean Community. "The Member States note with interest the macroeconomic policy surveillance and convergence initiatives launched in recent years by both the Andean Community and Mercosur", states the text, specifying that: "the EU stands ready to share its experience with multilateral surveillance and coordination of macro-economic policies".