Local view for "http://purl.org/linkedpolitics/eu/plenary/2004-09-15-Speech-3-106"
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"en.20040915.6.3-106"2
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".
Mr President, we had an interesting meeting in Scheveningen. The discussion was based on three papers. First, a Commission communication on the Stability and Growth Pact; second, a Court ruling on the excessive deficit procedure with reference to Germany and France; and third, a statement by the European Council on the Stability and Growth Pact. Ministers agreed that the Commission communication offered a good basis for discussion.
The discussion was held in two parts. First, we had a long discussion in the euro group with the 12. Next, we discussed these conclusions in the group of 25, because the other 13 hope to become members of EMU as soon as possible. The first conclusion we came to – contrary to some press interpretations – is that Ministers are not seeking to water down the pact, but rather want it to be strengthened, clarified and better implemented. Of course, the discussions could not be concluded in a single day, so we gave our collaborators some political guidance to enable them to work on the question in the future, together with the Commission.
The first thing we noticed is that, contrary to what is sometimes thought, the Stability Pact has proven its usefulness in anchoring budget deficits. If you compare, for example, the budget deficits in the Member States during the current slowdown with earlier slowdowns, or with what is happening elsewhere in the world, it can be seen that the pact has contributed to lower deficit levels than we would otherwise have seen. If you also look at interest rates and inflation, we can be pleased with the effects of the combined budgetary and monetary policy.
The second point we agreed upon is that we will not change anything as far as the 3% or 60% criteria are concerned – these are in the Treaty, are of paramount importance and should not be changed. We also agreed that a rule-based system remains the best guarantee for ensuring that commitments are enforced for all Member States in an equal way. We agreed that the Treaty should not be changed at all and that changes to regulations should be kept to a minimum, if indeed they are needed at all, but we are not sure of that yet.
In strengthening and clarifying the Stability and Growth Pact, due consideration should be given to strengthening its economic rationale and its implementation. To ensure the credibility of the framework, rules should be kept both transparent and simple. We think the following elements should be analysed. Firstly, the preventive arm of the pact should be strengthened. A more symmetrical approach to fiscal policy is needed through budgetary discipline during good times so as gradually to achieve budgetary surpluses when the upswing comes. Secondly, we shall use peer pressure and peer support at an early stage of budgetary deviations, rather than waiting until a country breaches the 3% rule. Thirdly, we need transparent budgetary figures and growth assumptions in order to identify and correct budgetary deviations in a timely manner.
The second issue we discussed was debt and debt sustainability. The focus on these elements should be enhanced. Firstly, more attention should be paid to the fact that a debt ratio should be sufficiently diminishing if it is above its reference value, approaching the reference value at a satisfactory pace. Secondly, in assessing whether a Member State has reached sustainable public finances, the costs of ageing should be taken into account. Thirdly, we agreed to look further into the issue of debt sustainability. One particular concern centred on the possible statistical implications of pension reforms. Thus concerns a few countries, but is something we should investigate further.
A third important element is that when a country is subject to an excessive deficit procedure and we have to assess whether it is complying with the recommendations, we should make a clear distinction between measures taken, on the one hand, and economic forecasting errors. Until now we issued recommendations on the efforts required and hoped for a result, but that result was in the same spirit as the written forecast. Thus in future, when assessing whether or not a country has met the recommendations, we should make a distinction between policy mistakes and forecasting mistakes.
Finally, within the framework of the Stability and Growth Pact, budgetary policies need to set the right priorities for structural reforms, innovation and competitiveness in support of the Lisbon Agenda to promote economic growth and create jobs. We asked the Economic and Financial Committee and the Commission to work these principles out further so we can have another discussion at ministerial level. We also agreed that it would be best to hold this discussion in parallel with discussions on France and Germany and the excessive deficit procedure applied to them."@en1
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