Brussels, 16/11/2004 (Agence Europe) - During the Eurogroup meeting on Monday evening, the Stability and Growth Pact was the subject of indepth discussion on the basis of six options (Ed.: given by the Economic and Financial Committee), Gerrit Zalm, Council President, told the press. After the Council, there was "some convergence", but the discussion points to several tracks that the Committee should explore to allow less mechanical application of the Pact's rules. On Monday evening, the finance ministers of the twelve euro-zone Member States did not go much further than the points in the agreement established in September in Scheveningen, but they "were able to compare their ideas", Commissioner Joaquin Almunia said for his part. He was pleased to see that his guidelines had been used (although he admits that, on some points, opinions do differ also "among Member States"). French Minister Nicolas Sarkozy said for his part: "Eight months ago it would have been a heresy to discuss changes to the Pact, but now everyone is hoping for a change". Discussions will continue during several months and the question will again be tackled during the Ecofin Council in January, Mr Zalm said. Ministers examined:
Ways to avoid pro-cyclical policies and promote budgetary discipline during growth periods. On this point, Mr Zalm notes that there is broad consensus. Discussions could be on greater peer pressure, an early warning procedure allowing for irregularities to be anticipated, and, possibly, internal instruments in Member States.
Ways to achieve better governance, which requires national appropriation of the process through national parliaments and a better framework for internal surveillance. Quality statistics or national stability pacts of a kind could be effective instruments. The Commission's proposal to reach the public by naming and shaming the States at fault, on the other hand, causes some annoyance, and the Member States seem on the other hand to hope for increased confidentiality in the transmission and publication of information at the various stages of the procedure.
The definition of medium-term objectives to which Member States must aim, and which could in future depend on the specific economic situation of each Member State, thus bringing into question the application of a single and inflexible system for all 25. Taking the level of the debt and its dynamic into account could, for example, authorise a member State with a low debt to be "less ambitious" in terms of public deficit, Mr Zalm admitted. This should be to the advantage of research and development, structural reforms and public investment. Mr Zalm, however, stressed that, during the debate, a majority of Member States felt that the "categories of spending should not be excluded" from public deficit calculation. France is in favour of excluding investment from the calculation in favour of research and innovation and, according to Nicolas Sarkozy, was mainly followed by Germany, Italy and Belgium (while his Spanish counterpart, Pedro Solbes, confided to the Italian daily, Il Sole 24 Ore, that public research and development spending cannot justify going beyond the 3% ceiling). No settlement was reached on the issue of taking spending relating to population ageing into account.
The increased importance of the debt criteria, which will require establishment of a common framework for evaluation. Some foresee a quantitative instrument, with qualitative aspects such as growth, but others are opposed to this.
Taking into account structural reforms (as in the Lisbon Strategy), which implies that it is necessary to arbitrate between short term costs and gains to be made in the long term.
Implementation of excessive deficit procedure for the Stability Pact, which could be improved by taking the specific economic circumstances of the Member State concerned into account, not only at the time when the procedure is started but also when the necessary adjustment measures are defined for correcting the situation. To Germany's satisfaction, attenuating circumstances could include the net contribution of Member States to the European budget (Ed.: Chancellor Schröder had evoked this possibility during the European Council of 5 November). From a technical point of view, modifications to the procedure could then be necessary. However, taking into account the specific national situation when excessive deficit is noted by reviewing the definition of exceptional circumstances, rather than at the time of defining delays and means for returning to balance, presents the inconvenience of not placing the country under the increased surveillance foreseen by excessive deficit procedure. A majority of Member States are against any change at the beginning of the procedure.