Ireland has nothing to fear from tighter EU monitoring of member states' budgets, the Minister for Finance, Mr McCreevy, insisted yesterday. Strict budgetary discipline was something close to his heart, he said.
"It has been my contention for many years that this is the way to run an economy," he argued. However, he insisted the constraints imposed on Ireland by the EU Monetary Committee at the time of the March revaluation would not prevent him from honouring election tax pledges. "I am confident we can meet election commitments while keeping in line with the guidelines," he said. Mr McCreevy was in Luxembourg for a meeting of EU Finance Ministers which failed to reach agreement on a draft declaration for the May 2nd summit on the euro - the text submitted by the German Finance Minister, Mr Theo Waigel, seeks to reinforce and bring forward the disciplines of the post-euro Stability Pact.
The text has won broad support from ministers, although Italy and Belgium, the two most heavily indebted countries, are understood to be unhappy with the emphasis on "rapid" debt reduction and the French are insisting on upgrading the references to jobs. The emphasis is on the reiteration of the agreements at several summits on closer economic co-operation including the monitoring of "sound budget policies" - a French draft goes further in demanding tax harmonisation, strongly opposed by Ireland. The German draft simply says that "we consider that further progress must be made to avoid the effects of harmful tax competition".
It calls for the first time for "early consideration of member states' budgetary intentions for 1999" - well ahead of the Irish Budget of December 3rd, although Mr McCreevy insists he can meet the requirement by setting out the broad debt-reduction and inflation strategies of the Government, leaving the details of the budget for domestic consideration first. And the draft commits member states to meeting their 1998 budget targets, "if necessary through corrective action". And there is little room for tax giveaways for those out of line. "If developments are better than expected member states with deficit and debt-to-GDP ratios near or above the reference value of 60 per cent will use this opportunity to accelerate budget consolidation".
The meeting shone no light on the dispute over the presidency of the European Central Bank beyond a strong declaration from the Luxembourg Prime Minister, Mr Jean Claude Juncker, that he is not interested. The field thus still consists only of the Dutch and French bankers, Mr Wim Duisenberg and Mr Jean-Claude Trichet.
Sources suggest the composition of a six-person ECB board is likely to consist of a German, a Finn, a Frenchman, a Dutchman, an Italian, and either a Spaniard or a Belgian. Ireland is understood not to be seeking a position, while the British appear to have indicated they do not see any value in leaving an empty seat open for them when they do join up.
