EU agreement reached on Eurozone economic governance
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On Tuesday, Malta’s Permanent Representative to the European Union, Ambassador Marlene Bonnici, led the Maltese delegation at a meeting of the Economic and Financial Affairs Council (ECOFIN) in Brussels. She was accompanied by the Permanent Secretary in the Ministry of Finance, the Economy and Investment, Mr Alfred Camilleri.
The Ministers came to a political agreement on a compromise reached with the European Parliament on 20 February regarding the so-called ‘two-pack’ of two draft regulations aimed at further improving economic governance in the Eurozone.
The ‘two-pack’ builds on a previous set of economic governance measures, including the so-called ‘six-pack’ rules, adopted in November 2011. The two proposed regulations aim at enhancing the budgetary and economic responsibility of Member States, especially those which are under the excessive deficit procedure and experiencing severe financial disturbance.
Member States also held an exchange of views on the two proposals amending the EU’s rules on capital requirements for banks and investment firms. Known as the ‘CRD 4’ package, the proposals aim at amending existing capital requirement directives in order to bring them into line with an international agreement approved by the G-20 (known as ‘Basel 3’).
The two proposals consist of a regulation establishing prudential requirements that institutions need to respect and a directive governing access to deposit-taking activities. Malta joined other Member States in stating that the transposition target of 1 January 2014 is too ambitious to complete the required procedures.
A broad majority of Member States were in favour of the Presidency compromise text. However, further technical work with the European Parliament was requested, particularly on remuneration and the transposition deadline.
Ministers also examined a proposed package of measures aimed at better-combating VAT fraud, and discussed guidelines for future work on the package. The proposed package would address weaknesses in the VAT system – particularly in respect to cross-border transactions – which leave Member States vulnerable to fraud.
Finally, the Council held a brief exchange of views on the proposed further strengthening of the Economic and Monetary Union (EMU). This will be discussed further by EU Heads of State and Government at next week’s European Council Summit (14-15 March 2013), where talks will focus on the coordination of national economic policy reforms, as well as competitiveness and growth.
As is customary, the ECOFIN Council meeting was preceded on 4 March 2013 by a meeting of the Eurogroup which took stock of the economic situation in the euro area, including the fiscal challenges being faced by Cyprus.