Brussels, 27/04/2005 (Agence Europe) - “The Council of Governors continues to focus on sustained economic growth in 2005 and 2006”, said Lucas Papademos, Vice-President of the European Central Bank (ECB) on Tuesday. Presenting the ECB's annual report for 2004 to the parliamentary committee on economic and monetary affairs, Mr Papademos said that if growth seemed sluggish in the first half of 2005, conditions remain favourable in the longer terms, for investments and consumption in particular. Oil prices are still the main worry for economic activity and price stability, but inflation remains “more or less in line with the ECB's definition” (close to 2%), he said. In his view, monetary factors related to excessive liquidity accumulated over recent years and to real estate prices in the euro zone, which vary enormously from one Member State to the next, are added to this.
“Improvements in the implementation of the Stability and Growth Pact and its preventive plank are to be welcomed”, said Mr Papademos, who believes that in its corrective part, the reform finally allows greater flexibility and a “more arbitrary procedure” (taking account of additional factors and extending deadlines). “Is the ECB weakened by the reform of the Pact?” asked Kurt Joachim Lauk (EPP-ED, Germany), who is to be the rapporteur on this subject. Toeing the official ECB line, Mr Papademos explained the application of the Pact, rather than the changes made to it, would be key, because it will be up to the Member States to implement reforms to create sustainably healthy public finances. When asked about the possible impact of the reform of the Pact on the assessment criteria for joining the euro, Mr Papademos said: “The criteria to assess the Member States' convergence have not changed”. Integrating the Member States which joined at the last wave of enlargement into the European System of Central Banks (ESCB) happened “without incident”, said Mr Papademos, who pointed out that none of these countries currently meets all of the Maastricht criteria.
In answer to French Socialist Benoît Hamon, who voiced concern at the imbalances in the world economy and America's record external trade deficit, Mr Papademos borrowed the terms regularly used by the G7: “All governments must reduce imbalances by implementing the appropriate reforms, which is a relevant recommendation for all the countries in question”.