Brussels, 06/03/2003 (Agence Europe) - A large part of the ECOFIN Council in Brussels on Friday, chaired by Greek finance minister Nikos Christodoulakis, will be given over to seeking agreement on savings and energy taxation (see pages 6 and 7). The economy and finance ministers are expected to adopt several contributions for the Spring European Council, the most important of which cover strengthening the coordination of budget policy and key issues to be covered in order to establish Broad Economic Policy Guidelines for 2003. Despite reservations from Finland and the Netherlands, the ECOFIN Council should be able to endorse a positive opinion on the European Central Bank (ECB)'s recommendation on changing voting procedures on the ECB Governing Council. The Council will also adopt recommendations on the updated stability programmes for Luxembourg and Portugal.
Energy tax. The Council will again attempt to reach agreement on energy taxation, which Italy has linked to savings taxation (see page 6). Disagreements at this stage focus on the extension of tax exemptions for professional diesel beyond 2005, where Germany opposes Italy and France.
Preparing for the European Council of 21 March. The Council ix expected to adopt a summary report on the main questions to be dealt with in order to prepare the Broad Economic Policy Guidelines for 2003. The Council is expected to point out that in a weak economic climate, Member States should achieve and maintain budgetary positions of close to balance or in surplus over the economic cycle, eurozone Member States should annual improve their cyclically-adjusted budget position by at least 0.5% of GDP, and Member States should let the economic stabilisers operate within the Stability and growth Pact and improve the quality of public finances as part of a medium-term oriented strategy.
The Council will adopt a report on "Strengthening the coordination of budgetary policies", which makes some changes with regard to the Commission Communication. The Council says it agrees with the Commission that it will not be necessary to amend the Treaty or the Stability and Growth Pact or introduce new targets and budget rules. In the draft report, the Council notes that nominal balances are the reference point for the 3% deficit reference value of the Treaty; una tantum measures should be assessed on an case by case basis in terms of the interest they present (this wording satisfies Italy but not the Commission, the latter wanting measures to be more directly taken into account in calculating deficits); Member States of the eurozone whose budget positions are not close to balance or in surplus must improve their cyclically-adjusted position by 0.5% per year (in line with the Eurogroup pledge of 7 October 2002) (the UK still refuses to accept this pledge); to allow flexibility in the assessment of a close to balance or in surplus budget, "very particular" attention will be paid to a country's individual circumstances, particularly the long-term viability of public finance and the existence of sufficient safety margins in all circumstances (including the option of automatic stabilisers playing a full role); the speed of cutting public debt plays an important role in budget surveillance, particularly for highly indebted countries. In line with the Treaty, the procedure concerning excessive public deficits should help ensure a satisfactory speed in cutting the debt (contrary to what the Commission wanted, the debt criterion has not been retained as sufficient in itself to lead to proceedings being launched).
Ministers are expected to endorse and submit to the European Council a report by the European Policy Committee on structural reforms (noting that reform "is now too slow and insufficient"); and a joint Council-Commission report on adequate and sustainable pensions supporting national strategies for guaranteeing the viability of health systems for the elderly.
ECB. Ministers are expected to discuss the draft reform of the ECB Governing Council, about which the Netherlands has reservations (The Hague may lift its reservations if a declaration is adopted stating that the ECB system does not prejudge the reform of the other institutions), as does Finland. The Finnish government argues that little countries are marginalised by the reform. It is planning to consult its parliament first, on 14 March 2003 (only two days before the Finnish general elections).
Budget. The Council will adopt conclusions on its priorities for the 2004 Budget and on the discharge procedure on the execution of the 2001 budget.