Brussels, 05/06/2009 (Agence Europe) - The Ecofin Council will meet in Luxembourg on Tuesday 9 June to prepare a number of topics, in particular the future financial supervision architecture, for the European Council (18-19 June). Before that, EU finance ministers will gather for the annual European Investment Bank (EIB) Board of Governors meeting. Bank President Philippe Maystadt will report on the Bank's activities in 2008, its anti-crisis measures and propose future activities to support economic recovery.
Eurogroup. The previous evening (8 June), euro area representatives will hold a meeting that will be devoted to the mid-term assessment of member states' 2009 budgets. The 16 member countries will continue their discussion on adjusting budgetary strategies in order to achieve the “medium-term objectives” (MTO) in returning to balance, which have been pushed back everywhere because of the crisis. They will also take stock of the economic situation in the euro area with Marek Belka of the Europe desk of the International Monetary fund (IMF). On the day after the general election in Luxembourg, Jean-Claude Juncker (who will attend only part of the meeting) is expected to be in a position to be able to inform his counterparts of his intentions with regard to his continuing to head the Eurogroup (see EUROPE 9014), where he may no longer be able to sit as finance minister, although he may be able to stay if he holds another economic- and financial-related portfolio.
Preparation for the European Council. Following what promises to be a lengthy discussion (the Economic and Financial Committee will hold a further preparatory meeting this Monday), ministers are expected to adopt conclusions on the reform of the European financial supervision system ahead of the European Council. the latest guidelines presented by the Commission, based on the de Larosière group report (see EUROPE 9909) will have to be endorsed by the European Council before they can be drafted into legislative proposals in the autumn (to come into force in the course of 2010). The Ecofin Council is likely to reach agreement on the objectives put forward by the Commission in its communication, but several issues remain to be settled. This is particularly the case with the legal basis to be chosen for the creation of the two new bodies, the European Council on Systemic Risks and the European Financial Supervisors System, and the extent of the powers conferred on the three European authorities on macro-economic supervision which make up this latter (and which will replace the national regulators committees in securities, banking and insurance).
Ministers will also adopt two reports, one on the implementation of the European recovery plan, approved in December 2008 (it is unlikely that any new measures will be announced, with the impact of decisions taken until now only being felt towards the end of 2009 and in 2010) and the second on support measures for banks. While the level of public funding varies from one country to another, it averages 30% of GDP and bail-outs and state guarantees to banks have had a positive effect, the report states. Measures to deal with impaired assets are likely to be considered as a matter of urgency, where necessary.
Finance ministers will also seek agreement on conclusions on the financial implications of measures to combat climate change at international level. Ahead of a global agreement at the Copenhagen conference, the draft conclusions note that the EU remains ready to play its full part in funding these measures, but no figure is suggested. It calls on all world partners to decide on a breakdown of overall sharing, the calculation of which depends on still vague principles. The current text speaks of ability to pay and responsibility for emissions as elements that have to be used to determine how the burden is to be shared (at international level and within the EU), but Poland is against this second principle. The issue may remain pending until the European Council.
Economic situation and future procedures for excessive deficits. The European Commission is expected to inform ministers of its intentions on the next deadlines on excessive deficit procedures. Initially, it will act against countries on which it has adopted reports (Article 104§3 of the Treaty) leading to the formal opening of such a procedure. It might, then, take action at its meeting of 17 June, recommending that the Council note (from July) the existence of excessive deficits (Article 104§5 and 6) and propose a timescale for correcting this deficit (Article 104§7) for Lithuania, Malta, Poland, Romania and Latvia (see EUROPE 9901).
The Commission, however, also plans in coming months to launch the same kind of procedure against member states whose public debt could exceed 3% of GDP in 2009. Nine countries are targeted: Germany, Austria, Belgium, Italy, the Netherlands, Portugal, the Czech Republic, Slovakia and Slovenia. With procedures recently launched against four countries (Spain, France, Greece and Ireland) and those previously initiated against Hungary and the United Kingdom, there are 20 EU countries that should be officially concerned by excessive deficit procedure in the near future. Only member states remaining within the Stability and Growth Pact (SGP) threshold (while presenting budgetary deficits) - Cyprus, Luxembourg, Finland, Bulgaria, Denmark, Sweden and Estonia (which is just -3%) - will escape this year.
Accounting standards. Ministers will then hold an exchange of views (possible during lunch) on standards used for assessing financial instruments. David Tweedie, President of the IASB (International Accounting Standards Board), and Gerrit Zalm, Chairman of the IASCF (International Accounting Standards Committee Foundation), will attend. The EU27 are concerned about the lack of clarity and consistency in assessment standards for assets at international level. They fear competition distortion arising from recent changes made by the United States to its accounting standards, which give more latitude to US financial institutions compared to their European counterparts (which comply with IFRS standards).
Tax governance. Finally, after a Commission communication on the subject (EUROPE 9891), the Council will adopt conclusions on good tax governance, i.e. measures aimed at facilitating transparency and the exchange of information as well as promoting fair tax competition within the European Union and in EU relations with third countries. The draft conclusions calls for work to be speeded up on extending Directive 2003/48/EC on Spain's tax revenue, on administrative cooperation between member states and mutual assistance in the event of fraud. (A.B./transl.rt/jl)