Brussels, 28/11/2006 (Agence Europe) - Given the rise in the euro, ministers of the eurozone have not shown excessive concern, reiterating the well-versed preventive message calling for exchange rates to be preserved from excessive volatility and undesirable movements. There is caution regarding exchange rates and satisfaction regarding the economic prospects of the area, for which the International Monetary Fund (IMF) gives a table that is in keeping with Commission and ministers' forecasts. Presented to the Eurogroup by Michael Deppler, IMF Director, the Fund's analysis of the economic situation in the eurozone over the short and medium term is in line with that of the Commission presented in its autumn forecasts (EUROPE 9300), said Jean-Claude Juncker after the meeting under his chairmanship.
“We believe 2006 will be a very good year and this performance will be kept up in 2007 and 2008” even though a slight slowdown is possible, the prime minister and finance minister of Luxembourg went on to say, also stressing that both the Eurogroup and the IMF had similar expectations when it comes to inflation. Inflation is expected to be “around 2%, i.e. at a level compatible with price stability”. The IMF makes a positive assessment of the evolution of recent deficits but, like the Commission, it considers budgetary consolidation must be enhanced during a period of positive growth. The analysis made by the IMF for the eurozone is “largely identical to our own analysis”, the Commissioner for Economic and Monetary Affairs was pleased to state, recalling that growth in the eurozone should be around 2.6% this year and above 2% next year (2.1% according to the autumn forecasts).
Joaquin Almunia stressed that they were a little more positive than the IMF about the effort being made by the eurozone in terms of public finance. He confirmed he would be recommending to the College on Wednesday that excessive deficit procedure against France be repealed. In the same way, if confirmed by the latest data for 2006, “we may also suggest this for Germany and probably Greece”, he pointed out. He still hoped Italy and Portugal would be carrying out further measures, although they do have until 2007 and 2008 to fall below the 3% mark. “We consider at Eurogroup that more effort must be made for achieving medium term objectives as rapidly as possible”, in line with the objectives of the Stability and Growth Pact in period of good growth, affirmed Mr Juncker.
Regarding the improvement of budgetary governance, the Eurogroup will, during its forthcoming meetings, hold a “cross-the-board debate on the consolidation of public finance in our different countries”. Ministers will seek to discuss national budgets, examining those of the Netherlands and Germany to begin with as they began their budgetary procedure earlier than other Member States. In June, they will proceed to a country-by-country analysis, after which they will publish the conclusions they have reached.
“As has always been the case and will continue to be so, we believe that excessive volatility and uncontrolled movements of exchange rates are undesirable for economic growth”, Mr Juncker said. As European currency reaches its highest level compared to the yen and a new peak compared to the dollar, approaching the $1.32/euro mark, “we shall closely examine the developments in weeks to come” on the exchange markets, he assured. This is a message of vigilance, without undue concern at this stage, so that discussions should not be amplified with the European Central Bank between now and the meeting next week, at which, according to economists' predictions, there will be a rise in interest rates. (ab).