Brussels, 18/04/2007 (Agence Europe) - European finance ministers will be meeting on 20-21 April in Berlin as part of their informal half yearly meeting, attended by the president of the European Central Bank (ECB) and governors of the national central banks. The quality of public finance and financial market stability will be high on the agenda.
Friday morning: finance ministers from the thirteen will first of all examine the economic situation in the Eurozone. The president of Eurogroup, Jean-Claude Juncker, will inform them about the results from the work of the group of the seven most industrialised countries (G7) and the International Monetary Funds (IMF) and World Bank meetings (EUROPE 9407). With the aim of improving coordination of budgetary policies, ministers will have an upstream discussion of the budgetary orientation debates organised in each member state. An exchange of views will take place on budgetary procedures in Germany and the Netherlands, while the situation of the eleven other countries will be examined at the end of June. Eurogroup will have a debate on the prospects for expanding the Eurozone. These debates will focus on the elaboration of convergence reports for Cyprus and Malta, as well as future requests for joining the European Exchange Rate Mechanism II (EMU II).
In the afternoon, EU finance ministers will proceed to an exchange of views on how public polices can encourage jobs and social inclusion. Debates will be introduced by Prof. Denis J. Snower, Director of the Kiel Institute for the Global Economy. Ministers will also discuss the report jointly presented by Gordon Brown, the British Chancellor of the Exchequer and Pat Nuder, former Swedish finance minister, at their informal meeting in Vienna in April 2006. The document calls for the creation of “social bridges” to help workers develop professionally in response to economic globalisation.
Ministers will also discuss improving the quality of public finances in the face of challenges, such as ageing of the population, which will confront member states in the future. Their debates will focus on how the use of performance indictors on the budgetary process increases the consideration paid to results in public spending. They will also consider how the financial basis needed to allow the state to perform the tasks entrusted to it may be secured over the long term, as well as future trends in public revenue structures. Two figures from academia - Professor Rick van der Ploeg of the European University Institute in Florence and Professor Michael P. Devereux, international tax policy expert at the University of Oxford - will present their views on these matters.
With regard to financial stability, ministers and governors of central banks will consider the extent to which the activity of hedge funds is connected with systemic risks. There would appear to be two different schools of thought on this matter: on the one hand, countries like Germany would like to see a European or international initiative forcing these funds to show greater transparency, through, for example, a voluntary code of conduct, while, on the other, the United Kingdom - backed by the Commission - prefers to ensure that financial institutions which have dealings with this kind of fund do not find themselves too exposed to the high risk activities of hedge funds. Following the informal meeting in Helsinki in September 2006, those taking part will be brought up to date on the progress of work on the measure to ensure the financial stability of the EU (see EUROPE 9262). It is also planned that ministers should return to the negotiations on the reform of IMF shares. Differences between Europeans and Americans, on the one hand, and emerging countries, on the other, are related to the criteria to be used to assess the economic weight of the different countries. Significant results are not expected before the second half of 2007.
Finally, combating Value Added Tax (VAT) fraud is the only tax matter on the agenda for the informal meeting in Berlin. Germany hopes to have a debate on the possibilities offered by the reverse charge mechanism in this area. This system - which makes the purchaser, rather than the seller, of goods liable for VAT - is only allowed in some member states provisionally and for a limited range of goods (see EUROPE 9408). A majority of member states oppose extending this system to country or even European level. The Berlin discussions will inform the work of the Commission, which will bring forward a European anti-tax fraud strategy in June. (mb)