Brussels, 13 May 2011
Preparation of Eurogroup and Economic and Finance Ministers Council, 16 and 17 May 2011
EUROGROUP, 16 May
The Eurogroup meeting will start on Monday 16 May at 18h30. It will be attended by Commissioner for Economic and Monetary Affairs, Olli Rehn. A press conference is expected to take place after the meeting, on Monday evening.
1. Greece – recent developments, implementation and possible future adjustments of the programme and the revised loan facility agreement
Ministers will discuss recent economic and financial developments in Greece on the basis of preliminary information from the Troika's review mission which is currently in Athens.
2. Ireland – review of the economic adjustment programme and endorsement of the draft revised Council decision
Staff teams from the European Commission (EC), European Central Bank (ECB), and International Monetary Fund (IMF) visited Dublin from 5-15 April for the first quarterly review of the government’s economic programme. The objectives of the Irish programme are to address financial sector weaknesses and to put Ireland’s economy on the path of sustainable growth, sound public finances, and job creation.
The teams’ assessment was that the programme is on track but challenges remain and steadfast policy implementation will be key. Programme implementation has been determined, despite the period of political change and an uncertain external environment. The new government has taken full ownership of the goals and key elements of the EU-IMF-supported programme, including the fiscal adjustment path and the restructuring and recapitalisation of the banking system.
Eurogroup Ministers will discuss the situation in Ireland and are expected to endorse the conclusions of this first review of the EU/IMF financial assistance programmeand approve the release of the next instalment of EU aid.
3.ECB Presidency: preparation of recommendation to European Council
Jean-Claude Trichet's term as the President of the ECB will come to an end on 31 October 2011. The appointment of the ECB Board President is set out in Article 11.2 of the Statute of the ESCB and the ECB: The Council has to make a recommendation (with only euro area Member States voting) to the European Council after consulting the European Parliament and the ECB Governing Council. The European Council then takes the appointment decision (by qualified majority, euro area only voting).
Before consulting the European Parliament and the ECB Governing Council, the Eurogroup asks for and reviews applications. The Eurogroup is now expected to take stock of the applications received.
ECOFIN Council, 17 May
The Council of Economic and Finance Ministers will start at 10h00. It will be attended by Commissioner for Economic and Monetary Affairs, Olli Rehn; Commissioner for Internal Market and Services, Michel Barnier; Commissioner for Financial Programming and Budget, Janusz Lewandowski; and Commissioner for Taxation and Customs Union, Algirdas Semeta. A press conference is expected to take place after the meeting.
1. Economic Governance (AAT)
The Commission's proposals to reinforce economic governance introduce more automaticity in fiscal surveillance. They constitute an effective toolbox to ensure sustainable public finances and more balanced macroeconomic policies in Europe. It is an effective framework for country surveillance as it contains the elements for an effective enforcement of the rules.
Ministers will continue their discussions of the six legislative proposals (the so-called "six pack") in the light of the European Parliament's reports, with a view to their adoption by the summer.
On 29 September 2010, the European Commission brought forward a legislative package which represents the most comprehensive reinforcement of economic governance in the EU and the euro area since the launch of the Economic and Monetary Union (IP/10/1199 and MEMO/10/454, MEMO/10/455 and MEMO/10/456). Broader and enhanced surveillance of fiscal policies, but also macroeconomic policies and structural reforms are proposed together with new enforcement mechanisms for Member States that deviate from their commitments.
The legislative package - currently on the table of the Council and the European Parliament - is made up of six pieces of legislation: four proposals deal with fiscal issues, including a wide-ranging reform of the Stability and Growth Pact (SGP), while two new regulations aim at detecting and addressing effectively emerging macroeconomic imbalances and competitiveness gaps within the EU and the euro area. For Member States of the euro area, changes imply giving more teeth to the Pact through an effective enforcement mechanism. The proposed rules limit discretion in the application of sanctions: the SGP will become more "rules based" and sanctions will be the normal consequence to expect for countries in breach of their commitments.
2. Short selling and Credit Default Swaps (CH)
On 15 September 2010 the Commission tabled a proposal for a regulation on short selling and certain aspects of Credit Default Swaps (CDS) (see IP/10/1126). Its main objectives are to create a harmonised framework for coordinated action at European level, increase transparency and reduce risks. At the Council, the Commission hopes to see an agreement concluded on a general approach to start negotiations with the European Parliament. Further to this agreement an inter-institutional trialogue will ensue. The Commission is engaging in view of concluding an agreement on the final text during the Hungarian Presidency.
3. Proposal to amend the Savings Taxation Directive (DB)
The Council will hold an orientation debate on the Savings Taxation Directive. The objective is to reach conclusions regarding the proposal to amend the Directive. The Council will discuss a compromise text on the extended scope of the amending Directive, having in mind that an ad hoc report on the effective implementation of the current Savings Taxation Directive, which is being prepared by the Commission, will be examined before the adoption of the amending Directive.
The Presidency intends to obtain the Council's support on the idea that discussions have progressed enough so that the Commission could prepare to start negotiations with the relevant third countries (Andorra, Liechtenstein, Monaco, San Marino and Switzerland). These negotiations should ensure that measures that would apply to them are equivalent to the text of the amended Savings Taxation Directive.
4. Report to the Council on Financial Sector Taxation (DB)
The Council is expected to take note of the report of the Hungarian Presidency on the state of play of discussions regarding Financial Sector Taxation. The report refers to ongoing discussions in the Council about the various options at stake: the Financial Transaction Tax (FTT) and the Financial Activities Tax (FAT). In parallel, the Commission is assessing the best ways forward in this matter. The results of the Impact assessment together with the contributions received during the public consultation that ended at the end of April should help the Commission to shape its policy proposals on financial sector taxation.
5. Financial back-stops (AAT)
Ministers are expected to discuss the common guiding principles in order to have credible backstop mechanisms in place at the time of the publication of the 2011 EU-wide stress test results. This is in response to the commitment taken by Heads of States or Government on 11 March and at the Spring Council on 24-25 March.
6. Review of the economic adjustment programme for Ireland (AAT)
See "Eurogroup" above.
7. Financial support to Portugal (AAT)
On 10 May the European Commission endorsed the comprehensive economic programme agreed by staff of the Commission, ECB and IMF with the Portuguese authorities.
This is an ambitious but realistic programme that enables Portugal to face its current difficulties and sets the basis for a more sustainable, more competitive economy that can boost growth and jobs. The assistance to be provided – €78 billion, of which two thirds from the EU and one third from the IMF- shows the strong international commitment to help Portugal and to safeguard financial stability in Europe.
The program is built on three pillars.
An ambitious fiscal adjustment effort to restore fiscal sustainability between now and end 2013. The deficit should decline to 5.9% in 2011, and to 3% in 2013 (in line with EDP recommendation). That will curb the debt dynamic in 2013.This is a demanding but realistic path.
A wide range of reforms to enhance growth and competitiveness, and to create jobs that are so badly needed, especially for the young people. This should be achieved by removing rigidities in the products and labour markets, by encouraging entrepreneurship and innovation, by unwinding internal and external macroeconomic imbalances, and through an ambitious privatisation programme.
Measures to reinforce the stability of the financial sector and to ensure it can fully deliver in its essential functions of providing credit to Portuguese businesses and households.
Ministers are expected to endorse the economic programme and the financial assistance.
8. Financing climate change, preparation of UN meetings (AAT)
Finance Ministers are expected to adopt Council conclusions on climate finance which present the main issues related to international climate finance after the Cancún conference in December 2010: fast-start finance, sources of long-term finance, and the establishment of the Green Climate Fund.
On long-term finance, there is a general view that it will be challenging but feasible to meet the commitment by developed countries to jointly mobilise $100 billion per year by 2020.
9. Information on the Informal ECOFIN meeting (AAT)
The Hungarian Presidency will debrief on the informal meeting held on 8 April in Gödölö.
10. Draft general budget for 2012 (PF)
Commissioner Lewandowski will present the draft EU budget 2012 to the ECOFIN. The draft budget was presented to the European Parliament and to the media on 20 April. In it the Commission proposed a 3.7% increase in commitments and a 4.9% increase in payments. The proposed increase is overwhelmingly due to the higher number of bills coming from 27 Member States that the Commission forecasts to. Its objective is to resolve double taxation problems for businesses across Europe as regards transfer pricing. There currently exists a complex system for deciding how to tax transactions between same-group and associated companies within the EU, and differences between Member States' transfer pricing rules can result in double taxation and heavy administrative burdens for businesses. The Forum therefore assists the Commission in finding practical solutions in order to achieve a more uniform application of transfer pricing rules within the Union.