Brussels, 09/03/2004 (Agence Europe) - On Tuesday in Brussels, the Ecofin Council adopted on the opinions of stability programmes in Germany, Spain, Portugal and Belgium (broadly inspired by the recommendations made by Commissioner Pedro Solbes' services (EUROPE 19 February 2004 p 10).
Germany: ministers of the economy and finance from EU Member States have noted the wishes of Germany to bring its deficit to below 3% of GDP in 2005 (as it said it would do during the Ecofin Council of 25 November). They also note that Berlin is committed to taking additional measures, if necessary, to respect these commitments. These measures could turn out necessary given that "in the case of the less favourable macro-economic situation, the adjustment planned on by Germany may be insufficient for correcting its deficit in 2005, declare ministers. Like the Commission, the Ecofin Council has underlined that two factors risk compromising this objective: the possibility of weaker growth in 2005; risks of increased spending on pensions, health and unemployment in 2004 and 2005. Moreover, the Ecofin Council believes that German forecasts won't be enough to respect the medium term objective of the stability and growth pact which consists in reaching a budget that is close to balance or surplus by the end of the programme (2007). Ministers point out that Germany's public debt will remain above the 60% limit set in the treaty during he 2003-07 period and that authorities in the country are only planning on reducing debt in 2007.
Belgium: the Council points out that despite deterioration in economic activity, the updated programme forecasts a budget surplus in 2003 of 0.2% of GDP (indeed 0.3% according to other estimates). Ministers underline, however, that this result is influencing by one off measures that have a positive net effect of 1.2% on GDP, particularly in regard to the Belgacom company. The Council also illustrates that Belgium is planning for a balanced budget in 2004 thanks to other one off measures. For 2005-06 the Belgian authorities take note of the country's intention to reduce public debt (by more tan 100% in 2003 to 87% of GDP in 2007). Macro-economic forecasts in the programmes are judged unrealistic, with the exception of those for 2005 (2.8% is thought by the Council to be too optimistic).
Portugal: the Portuguese strategy of budgetary consolidation appears economically "solid" in the eyes of the Ecofin Council, which, nevertheless, underlines the risks of slippage due to lower tax receipts than anticipated for 2004. Portugal is planning on a deficit of 2.8% of GDP in 2004, the same as in 2003. If these figures are confirmed, Portugal could obtain a lifting on the excessive deficit procedure begun by the Council against in inn November 2002. Portugal is expected to en slippage in public finances.
Spain: the Council takes note of the presentation of a budget that is slightly in surplus for the whole of the period (0.1% in 2005, 2006 0.2% and 0.3% in 2007). Spain appears to be relatively well placed for meeting the challenge of the ageing populations but the Council regrets that it has not implemented the vast reform for the pension system.