EU FINANCE ministers have failed to agree key aspects of a plan for budgetary stability for states joining the single currency, but may yet do so before this month's EU summit. The Minister for Finance, Mr Quinn, said last night that the issues still to be agreed would be discussed again by EU ministers on the eve of the summit, December 12th.
At a meeting of finance ministers in Brussels yesterday, progress was made towards agreeing the so called stability pact - the rules which will apply to states joining the currency union - but key issues remain to be resolved. Mr Quinn said he was "very satisfied with the progress made" and that the level of sanctions which would apply to member states who broke the budget rules had been agreed. These would be between 0.2 per cent and 0.5 per cent of the member states' GDP.
But key issues remain to be sorted out about how the fines would be imposed by the Commission and the circumstances under which states could escape fines because of short term economic difficulties. Mr Quinn said considerable progress had been made but it was still not certain that a deal would be ready to be ratified at the Dublin summit.
The Minister said these issues would now be examined by the EU monetary committee - comprised of senior finance officials and central bank representatives.
Sources at the meeting said there was disagreement over a precise definition of a severe recession which would allow a government to avoid sanctions if the downturn caused a deterioration of its public finances.
Germany and the Netherlands want the definition to include a 2 per cent decline in Gross Domestic Product (GDP) over four consecutive quarters. Others argued that such a strict interpretation would ignore the substantive economic differences within the 15 nation bloc.
The effort to secure a budget stability pact has become one of the most difficult hurdles in nailing down a blueprint for economic and monetary union (EMU).
Under a proposed plan, countries running annual deficits above 3 per cent of GDP could face stiff fines if they failed to curb expenditure.
German Finance Minister Mr Theo Waigel, the architect behind the stability pact, arrived at the meeting late in the afternoon when the talks shifted to the stability pact.
Earlier in the day, ministers were cautiously optimistic that the differences over the budget pact could be resolved. The other issues of a new ERM band linking the currencies of states not in the monetary union with the single currency and the legal status of the euro are ready to be ratified at the Dublin summit on December 13th and 14th.
Expressing the view of many EU ministers, French Finance Minister Mr Jean Arthuis said the decision on whether a government had an excessive deficit should be made after a proper evaluation of a country's economic circumstances.
Taking a shot at Germany's tough bargaining stance, Mr Arthuis added: "When you're in a community you have to try to reach a consensus rather than imposing your point of view."
