Brussels, 04/07/2008 (Agence Europe) - The first meeting of EU finance ministers under the French Presidency will be held in Brussels on Tuesday 8 July 2008. French Finance Minister Christine Lagarde will suggest that her colleagues adopt an oil price roadmap to ensure better organisation of EU work on the impact of high oil prices, following on from the guidelines set out at the June 2008 European Council (see EUROPE 9687). The roadmap would only cover issues for which the ECOFIN Council has any power. Related issues, like the current negotiations over the climate and energy package and liberalisation of the internal energy market, remain the responsibly of other groups of EU ministers. In a public debate, the French Presidency will describe its work programme for its six months in office, covering the following domains: responding to Europeans' concerns about the economy, boosting confidence in the EU's financial system, ensuring smooth functioning of the Economic and Monetary Union, pursuing integration of the internal market, and finalising the EU's budget for 2009.
A diplomat commented that he was a great believer in the effectiveness of roadmaps. Echoing initiatives launched at the end of last year on the stability of financial supervision, the ECOFIN Council is expected to draw up an oil price roadmap. A draft version of the roadmap sets out several possible directions to take to improve the way oil prices function, firstly and above all: having (1) a better understanding of changes in oil prices and the role of financial markets in such changes. By working out how much of oil price rises is determined by an underlying gap between supply and demand and how much is caused by financial speculation. The above-quoted diplomat asked how one could move towards greater transparency and how details of oil stocks should be publicised, perhaps on a weekly basis. He said that information about oil was partial, patchy and arrived after the event. The European Commission will be expected to provide information relating to these issues, which will feed the debate at the ECOFIN Council in Nice, France, on 12-13 September 2008, ahead of the October 2008 European Council. A final report will be submitted to finance ministers at the EU's December summit. (2) Another issue covered by the oil price roadmap is financial instruments to help improve energy efficiency, the use of renewable energy sources and a more user-friendly use of fossil fuels. The European Commission and the European Investment Bank will set out feasible financial and fiscal measures for the ministers that could be sued to reduce the EU's economy's dependency on fossil fuels. The European Commission will present its suggested review of the energy tax directive and the outcome of its work on reduced tax on low energy goods and materials. (3) The third section of the roadmap covers measures likely to reduce the impact of the oil price hikes. Here the French Presidency and European Commission brainstorm suitable measures, particularly tax measures. The exercise will lead to the unveiling of a document at the October 2008 ECOFIN Council ahead of guidelines to be published by the autumn 2008 European Council.
On Monday 7 July, the Eurogroup will examine as is its wont the economic health of the eurozone, especially following the interest rate rise announced on Thursday 3 July 2008 by the European Central Bank (see EUROPE 9696). The eurozone's finance ministers will also discuss the European Commission's report on ten years of EMU and how to improve its functioning in the future. The Eurogroup chair (until 31 December 2008), the prime minister of Luxembourg, Jean-Claude Juncker, will describe the Eurogroup's work programme for the rest of the year.
On Tuesday 8 July, the ECOFIN Council will endorse Belgium's stability programme and Poland's convergence programme (see EUROPE 9680). It will end the excess budget proceedings launched against Poland in July 2004. In 2007, Poland reduced its budget deficit to 2% of gross domestic product (GDP) (well below the 3% ceiling) in line with the Council's recommendations. According to the Commission's economic forecasts, Poland's deficit is expected to rise to 2.5% of GDP in 2008 and 2.6% in 2009, but the Council says that the corrections made by the Polish authorities are expected to be credible and sustainable. The EU27 is expected to adopt a decision under Article 104, paragraph 6 of the Treaty on the existence of an excess budget deficit in the United Kingdom, and a recommendation, based on Article 104, paragraph 7 of the Treaty, of corrective measures to bring the UK back within the limits set out in the Stability and Growth Pact by 2009-2010 (see EUROPE 9696). Ministers will give the final go-ahead for Slovakia joining the euro on 1 January 2009 (see EUROPE 9657). Following the green light from EU heads of state at the last European Council, all that will remain to be done is for technical measures to be decided upon, namely the fixed and irrevocable exchange rate for the Slovakian crown against the euro. This will give the Slovak authorities six months to introduce the measures needed to change over to the euro.
In terms of financial services, the EU's financial ministers will discuss the implementation of roadmaps on financial stability (reacting to the current financial crisis and preventing - or managing - crises arising from the collapse of banks operating in more than one country) and on strengthening the supervisory framework for financial institutions (see EUROPE 9660). They will adopt a conclusions document backing the idea of better regulations for rating agencies by making them register with the EU. The above-mentioned diplomat says this would be a first stage, enabling the ECOFIN Council to establish political recognition of the need to do something at EU level to improve the transparency of rating agencies. The conclusions document will stress the importance of openness in the workings of financial players and will welcome recent recommendations from the Committee of European Bank Supervisors (CEBS) on the evaluation of assets.
The ECOFIN Council will adopt conclusions on the current reform of the International Accounting Standards Board (IASB), responsible for drawing up the International Financial Reporting Standards (IFRS) applying in the EU (see EUROPE 9686). The conclusions document will welcome a beefing up of the IASB's powers through the creation of a surveillance council comprising member states' public authorities responsible for the general interest. The above-cited diplomat commented that the paradox at the moment was that the EU is the biggest economic area in the world using IFRS but the EU's presence at the IASB is extremely weak. As part of the debate about the so-called 'fair value' rules on financial turbulence, the conclusions document will say that it is “urgent” for the EU to able to contribute more to the debate on international accounting standards. (A.B./M.B./transl.fl)