Luxembourg, 12/04/2005 (Agence Europe) - At the conclusion of the meeting of the Eurogroup on 11 April, Jean-Claude Juncker told the press that the budgetary situations of Germany, France, Italy, Greece and Portugal “are still giving us problems”. If excessive deficit proceedings against Italy are looking more likely, “we will need several months more to establish our judgement” in the cases of France and Germany, he added. Without wording their warnings any more strongly than previously, the ministers of the euro zone once again regretted the chaotic movements in the exchange rates. The position to be presented at the meeting of the G7 in Washington will be similar to previous ones, calling for each region to do its bit to fight global economic imbalances, and on the Asian countries to show greater monetary flexibility.
“I intend to present a report to the Commission on the basis of article 104§3 of the Treaty”, the Commissioner for Economic and Monetary Affairs, Joaquin Almunia, told the press, stating that this would be done in June. According to the Commission's recent spring forecasts, Italy's budgetary deficit may reach -3.6% in 2005 and -4.6% in 2006 (EUROPE 8920), but the Italian finance minister, Domenico Siniscalco, whom Joaquin Almunia met on Tuesday, is predicting higher growth in GDP than the Commission's forecasts. Before deciding to start excessive deficit proceedings against Rome, all doubts must be lifted on the situation of the Italian public accounts for the financial year 2004. On this, Mr Almunia voiced his hopes that talks between Eurostat and the Italian statistics authorities would be concluded “as soon as possible” (EUROPE 8912), and Mr Siniscalco announced that the latest budgetary figures would be available in May.
The same procedure under article 104§3 may be triggered for Portugal, whose deficit could fall to -4.9% this year, but the timescale is likely to be longer than for Italy, said Mr Almunia, who is waiting for the country's updated stability programme, to be submitted to the Portuguese Parliament this May.
Greece, on the other hand, has made “serious efforts” to bring its deficit down, said Mr Juncker, who feels that Athens “is responding to the requirements put forward” by the Council in its letter of formal notice last February. Portugal must continue to apply its 2005 budget “extremely rigorously”, and prepare measures for 2006, said Mr Almunia. Under Greece's stability programme, the deficit is likely to fall from -6.1% in 2004 to -3.7% in 2005 and then to -2.9% in 2006. The Commission's recommendations did not come as a surprise to the 25 finance ministers (EUROPE 8922, p.12), who did not recommend a move to the next stage of the excessive deficit proceedings.
France, which the Commission feels is running the risk of falling to -3.4% in 2006, and more particularly Germany, with an economic forecast of -3.3% this year, remain under increased budgetary surveillance. New decisions may be necessary in the next few months, but “for the time being, procedures carried out in the past will be sufficient”, reiterated Mr Almunia. He said that Hans Eichel had recognised that the German situation was “not easy” and pledged to take new measures if the situation called for them. The Commission will see whether new recommendations against the two countries are necessary “after the summer”, said Mr Almunia. Between now and then, all of the new rules of the Pact can enter into force, as Mr Almunia intends to present his proposed modifications of regulations 1499/97 and 1467/97 to the College on 20 April.
On the issue of exchange rates, the ministers did not stray from its habitual rhetoric. Before attending the meeting of the G7 finance ministers in Washington on 16 April, Mr Juncker announced that he would repeat word for word the statement he made in London in February (EUROPE 8883), that “excessive volatility and chaotic movements in the exchange rates are not good for economic growth”. This position comes with a message to China, amongst others, calling for an “orderly appreciation in the rates of exchange of various Asian currencies”. The increase in oil prices, which were described last week by ECB President Jean-Claude Trichet as “highly unwelcome”, will also be on the agenda in Washington. “We under-estimated the development in oil prices”, Mr Juncker acknowledged, calling on the Commission to repeat its evaluation of the impact of oil prices for a forthcoming meeting of the Eurogroup. He cautiously said that data on strategic reserves are still “insufficient” and that the transparency of information on oil markets globally must be stepped up.