Luxembourg, 07/06/2006 (Agence Europe) - On 6 June, a representative of the International Monetary Fund (IMF) briefed finance ministers from the eurozone at their Eurogroup meeting, on the IMF's analysis of the economy of the eurozone and the improvement in its economic situation. In a briefing paper published after its study of the eurozone, the IMF writes that optimism on the short-term prospects is in order and the opportunity to confidently transform the economic fundamentals should not be missed. It points out, however, that the prospects post-2006 raise some questions. The IMF predicts inflation of above 2% for most of the period until 2007, but says it should fall to below 2% after that. On the boarder stage, the IMF says that stronger growth levels will be required to cope with global imbalances.
In terms of the budget, the IMF noted big challenges because of the ageing population, warned Michael Deppler, the IMF's Europe director, calling for an adjustment of at least 0.5% of gross domestic product (GDP) a year for the next four or five years. The IMF recognises progress made by the Financial Services Action Plan and the introduction of the Lamfalussy legislative process for financial services, but feels that a clarification and integration of national authorities' surveillance powers will be required to maintain the rhythm of cross-border mergers and acquisitions and improve financial stability. The IMF also calls for greater efforts to be made to reach agreement in the world trade talks at the World Trade Organisation, known as the Doha Round. Deppler said serious political desire for liberalisation was required, including liberalisation of the EU's agricultural policy.
On Tuesday evening, Jean-Claude Juncker, chair of Eurogroup, said he was delighted to hear the IMF say that the upturn in the EU's economy was on the right track. He said that experience in implementing the March 2005 revision of the Stability Pact had not given rise to the problems some analysts had predicted.