This is what the Slovenian Minister of Finance and current President of the Economic and Financial Affairs Council (ECOFIN), Dr Andrej Bajuk, stressed during the Council meeting. He added, “The informal ECOFIN meeting in Ljubljana on 4 and 5 April will constitute an important milestone in work in the area of financial stability. Examination of progress on supervision, particularly in terms of cooperation between national supervisory authorities, agreements on ensuring financial stability and cross-border financial crisis management, will be the main topics of the meeting.” At today's meeting, the Finance Ministers focused primarily on preparations for the spring European Council on 13 and 14 March, in the context of which they also adopted the interim report on the current situation on the financial markets.
In the interim report to the European Council, the ECOFIN Ministers pointed out that conditions in the international financial system remain unstable. Although substantial adjustments have already taken place, further mark-to-market valuation losses on securities can be expected for the final quarter of 2007. Despite the credit crunch, however, the volume of credits to the corporate sector has not been affected. Several successive years of strengthening profitability have left most EU banks in a strong financial position, enabling them to deal with shocks. In an environment of constant financial innovations, which poses new challenges for financial supervision at national, EU and global level, the prudential framework and the risk management in individual institutions need improvement. The Informal ECOFIN Meeting in Ljubljana on 4 and 5 April will address a number of specific issues as a follow-up to the turmoil with the aim of preventing the recurrence of such a phenomenon in future.
The Ministers confirmed the text of the Broad Economic Policy Guidelines for the period 2008-2010 and the recommendations to the Member States resulting from three months’ work, including an assessment and recommendations with regard to the implementation of the Economic Reform Programme in each individual Member State, as well as specific recommendations for the euro area.
With regard to the sovereign wealth funds, the Ministers exchanged views based on the Commission report. The Ministers underlined that the EU is committed to maintaining a global investment environment based on the free movement of capital and the effective functioning of world capital markets. The Ministers agreed that there was a need for a common EU approach to be developed in accordance with the following principles: commitment to an open investment environment, support for multilateral work, use of existing instruments, respect for the obligations laid down in the Treaty establishing the European Community and national obligations, as well as proportionality and transparency. There was support for the Commission recommendation on introducing a code of conduct for these fund owners and a definition of principles for recipient countries at the national level.
Under the Stability and Growth Pact, the Ministers discussed and adopted an opinion on the second series of stability and convergence programmes in respect of 14 Member States. Nine countries – Bulgaria, Cyprus, Denmark, Estonia, Ireland, Latvia, Lithuania, Slovenia and Spain – have already achieved their mid-term goals and were therefore invited to maintain their structural position. Five countries – Austria, Czech Republic, Greece, Malta and Portugal – have not attained their mid-term goals and were therefore called upon to expedite deficit and debt reduction and, to this end, to assign possibly better public finance results than expected.
In the area of value added tax, the Ministers discussed measures to combat tax fraud, but it was not possible to reach agreement on conclusions. The great majority of States support the priority given to conventional measures, while two States insist on introducing a pilot project on reverse tax liability as a measure against tax fraud. The Slovenian Presidency will endeavour to put measures to combat tax fraud on the agenda at the next ECOFIN meeting during its Presidency period.
