ECOFIN adopted Tuesday a recommendation and a decision giving Portugal an extra year, until 2014, to correct its excessive budget deficit.
This was announced by Cypriot Minister of Finance Vassos Shiarly, who chaired the ECOFIN Council, that took place in Luxembourg.
“The recommendation sets deficit targets of 5,0 % of GDP for 2012, 4,5 % of GDP for 2013 and 2,5 % of GDP for 2014”, Shiarly said.
He noted that this follows the fifth review by the Troika of progress by Portugal in implementing its economic adjustment programme.
Shiarly also said that the Council took stock of developments with regard to the introduction of a financial transaction tax (FTT) in a limited number of member states, via enhanced cooperation.
The proposal for an FTT aims at enabling a fair tax contribution to be made by the financial industry, which is currently under-taxed in relation to other sectors. It also aims at creating a disincentive for transactions that do not enhance the efficiency of financial markets.
The Council discussion on 22 June this year revealed insufficient support for the measure as it was initially proposed by the Commission, but several member states have indicated that they would be interested in participating in an enhanced cooperation. The European Council in June suggested that a decision on enhanced cooperation should be taken by December 2012.
The finance ministers of Germany and France have recently submitted a letter to the Commission inviting it to present to the Council a proposal for a decision authorising enhanced cooperation, with its scope and objective based on the Commission`s original proposal.
Shiarly told journalists that “today we received confirmation that seven member states – Germany, France, Austria, Portugal, Belgium and Slovenia and Greece – have sent letters to the Commission. Some other countries expressed their interest today in participating in enhanced cooperation. These member states include Spain, Esthonia, Italy and Slovakia”.
He recalled that official letters from at least nine member states are required in order for enhanced cooperation to proceed.
In addition, Shiarly said that the Presidency informed ministers about the state of negotiations with the European Parliament on bank capital requirements, the so-called CRD 4 package.
The package, he added, will form an essential element of the single rulebook and it`s important to have it adopted before the single supervisory mechanism enters into force.
The Cypriot Minister noted that a number of key issues still have to be resolved. These include the SIFI buffer and flexibility for member states to impose additional capital, as well as liquidity ratios.
“Our aim is to reach agreement before the end of this year. So far, the Cyprus Presidency has held eight political trilogues with the Parliament and many more technical trilogies”, he indicated.
The Council also held a discussion on how to improve the European Semester process, which each year monitors the member states` economic and fiscal policies.
“We discussed how to tackle issues such as time constraints, implementation of the "comply or explain rule", strengthening the sense of ownership by the member states, and ensuring that recommendations are concrete enough whilst allowing member states to make their own policy choices”, he said.
Shiarly noted that today`s discussion will serve as input for a review that we intend to conclude in December, at the same time as launching the 2013 European Semester.
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