15 May 2004

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Malta at ECOFIN council meeting as EU Member

Yesterday marked the end of the European Council’s ECOFIN meeting for May, with Malta shedding its observer status and taking part in discussions with the other 24 Member States as a fully-fledged EU member, including voting rights.
Prime Minister and Finance Minister Lawrence Gonzi was accompanied by Parliamentary Secretary Tonio Fenech and Finance Ministry Permanent Secretary Paul Zahra.
Yesterday’s council meeting was devoted to the management of healthcare expenditure, broad economy policy guidelines, financial services and the European Investment Bank’s external lending.
There was remarkable activity throughout the council meeting as newcomers to the EU backed decision to bend the eurozone budget rules for Italy, which according to Maastricht’s Stability and Growth Pact, budget deficits must remain under three per cent for members in the eurozone.
However, these are also the very countries whose own economic situations at present prevent from entering the Exchange Rate Mechanism, the waiting room for those states who wish to join the Euro. EU rules state new members must wait at least two years before joining, to keep national currencies stable and limit fluctuations. Estonia has a budget surplus of 2.6 per cent of its GDP, Lithuania and Slovenia both have deficits of 1.8 per cent.

Malta, whose deficit is over six per cent, hopes for membership in 2008, according to foreign news sources, along with Slovakia and Latvia. Poland, Hungary and the Czech Republic are looking towards the end of the decade. Estonia, Lithuania and Slovenia aim to swap their national currencies for the euro in 2007.
In the EU’s first council meeting as a group of 25, the newcomers went along with an agreement by eurozone nations to give Italy more time to brings its budget deficit below the statutory three per cent of GDP.
France and Germany were pardoned by the other nations last fall despite repeatedly breaching the three per cent limit. The EU’s head office is contesting the decision in court, but German Finance Minister Hans Eichel repeated that sluggish growth may force Germany to break the rules yet again next year.
The free pass given to the EU’s big three is not being offered to the newcomers, who must meet strict conditions of low inflation, budget deficit and public debt to qualify for membership in the common currency club.

Copyright © Newsworks Ltd. Malta.
Editor: Saviour Balzan
The Malta Financial & Business Times, Newsworks Ltd, Vjal ir-Rihan, San Gwann
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