Euro zone finance ministers will weigh the economic impact of the euro's continuing strength and high oil prices later today when they meet for the first time since loosening rules aimed at curbing deficits.
The discussion of currencies and oil is part of preparations for a meeting of Group of Seven finance ministers in Washington this week, an EU diplomat said, adding the 12 ministers were not expected to issue a statement.
Finance ministers from the G7 leading industrial nations - which include Germany, France and Italy from the euro zone - meet on the side lines of the spring meetings of the International Monetary Fund and World Bank.
The euro zone ministers meet against a sombre backdrop of deteriorating public finances in several member states and weak growth prospects in the euro zone's top three economies.
At their Luxembourg session, the ministers will review the European Commission's latest forecast for budget deficits, which projects that one-third of the single currency bloc's members will breach the EU spending limit this year.
The Commission expects Italy will break the deficit limit of 3 per cent of gross domestic product with a 3.6 per cent shortfall this year and 4.6 per cent in 2006.
The Commission forecast Germany will stay above the 3 per cent threshold for a fourth year in 2005 with a deficit of 3.3 per cent, but noted Berlin may avoid sanctions anyway.
Apart from let-out clauses for reasons such as very slow growth, the revamped pact offers indulgence to countries whose breach of the ceiling is small and temporary.
The 25 finance ministers will also discuss if the EU is on schedule to introduce taxation of savings income paid to EU residents on July 1st, and talk about a possible increase in minimum excise tax levels on alcohol.
They will touch on the EU's long-term budget, cutting red tape for small and medium sized firms as well as review a Commission report on ways of financing development aid.
The Commission will also present its economic policy guidelines, which should help member states in drawing up their own plans to speed up growth and create jobs.