Brussels, 11/07/2002 (Agence Europe) - Eurozone Member States' finance ministers met up at 20: 00 hrs on Thursday under the chairmanship of the Greek finance minister Nikos Christodoulakis (Denmark is not in the eurozone) to discuss problems encountered by countries like France, Italy and Portugal to meet their commitments in terms of public deficits, against a backdrop where various Member States are calling for the Stability and Growth Pact measures to be added to since some of them view it as "over-rustic". Commissioner Pedro Solbes will be reminding the problem countries to stick to the commitments they made at the Seville European Council.
Portugal will not escape from infringement proceedings because of its excessive public deficit. This will be the first time infringement proceedings will be launched in the history of EMU, once the Commission has received and analysed the results of the audit into Portugal's public finances. Public finances may have slid so far as to be the equivalent of 3.9% of GDP in 2001 (well above the 3% GDP limit set in the Stability Pact). The procedure will be retroactive to an extent because it covers the 2001 budget and certainly symbolic to show that the Stability Pact is being respected and not, as one diplomat explained, involve any sanctions being applied since Portugal has already taken corrective measures after five years of loose management under the previous government.
As for Italy and France, the early warning procedure is the only one that is apparently on the cards (but not before the autumn). Since France was given authorisation by the Madrid ECOFIN Council to reach a close to balanced budget in 2004, Italy feels it has the right to have a budget deficit of 0.8% in 2003 and 0.5% in 2004 without the risk of being called to order by the European Commission, despite the fact it pledged at the beginning of 2002 to bring its budget to equilibrium in 2003 (and repeated this in Seville). The French public deficit will be between 2.3% and 2.6% in 2002, as against predictions of 1.85%. France had not taken the painful measures that were necessary to put its public finances in order, said Solbes in an interview in the Berliner Zeitung in Germany on Wednesday, criticising Paris' plans to exclude some forms of public investment from the deficit calculations. Sources suggest that Ireland is also facing budget problems.
Eurogroup will also be looking at the general economic situation and will again be discussing Solbes' letter outlining suggestions in terms of stepping up the co-ordination of economic policies (the European Commission will unveil a Communication in this connection in October or November 2002). Other issues on the agenda include the Greek Presidency's working programme for Eurogroup and the presentation by IMF Director Michael Deppler of the conclusions of the investigations carried out by the IMF into eurozone countries.