According to the six-month work programme presented in ECOFIN’s meeting on 18 January 2011, the Hungarian Presidency focuses its efforts on the earliest possible adoption of the six legislative proposals related to economic governance and the meeting of tight deadlines in the European Semester.
”Hungary is committed to enforcing the coordination of economic policy within the European Union”, said, György Matolcsy, Minister of National Economy, in a press conference following the ECOFIN’s meeting in Brussels. Previously, Mr Matolcsy presented member state economic and finance ministers, the Hungarian work programme, focused on the reinforcement of economic governance, the start of the European Semester, the promotion of the establishment of the permanent European stability mechanism and the continuation of financial regulations.
A key indicator of the Presidency’s success may be the adoption of the six legislative proposals, establishing a new structure of the EU’s economic governance, Mr Matolcsy stressed. Four of the drafts submitted by the Commission in September 2010, will be adopted by ordinary legislative procedure, for example. via a co-decision of the Council and the European Parliament. By contrast, the remaining two proposals aimed to strengthen the corrective branch of the Stability and Growth Pact and to establish minimum requirements for national budgetary framework systems, require special legislative procedure with the European Parliament’s competence restricted to consultation.
More credible economic policy
The Hungarian Minister for National Economy explained that the Presidency intends to start negotiations over the six pieces of draft legislation, as soon as possible because any crisis management mechanism of the EU can only be successful if accompanied by an economic policy; which is much more credible than the present one. Given the progress of work in the ad-hoc Council working group, set up during the Belgian Presidency’s term in November 2010; it is reasonable to expect an agreement between member states in March at the latest, over the general approach which enables the Council to start substantial negotiations with the EP. The Hungarian Presidency is ambitious to help the Council and the Parliament to reach an agreement over all legislative proposals by late June.
At his talks in the European Parliament on 11 January, Hungarian Foreign Minister, János Martonyi, stressed that both institutions should make serious efforts to achieve the Hungarian Presidency’s aim. The Presidency is ready to implement the closest possible cooperation with the EP, and believes that no one has an interest in connecting the six legislative proposals with any other current issue.
Another priority of the Hungarian Presidency is the smoothest possible start to the European Semester, a new procedural cycle aimed at the ex ante coordination of national economic and budgetary policies. Mr Matolcsy reminded his counterparts that the Presidency sets great store, by meeting the strict deadlines so that the Council’s session in March can give clear-cut strategic instructions to member states on the preparation of their respective stability/convergence programmes and national reform programmes due in April.
The European Semester’s content is based on the Annual Growth Survey disclosed by the Commission on 12 January, which was also discussed at the ministerial meeting. In regards to the procedure and deadlines, the Presidency forwarded to member states the itinerary of the coordination process. Economic and finance ministers, unanimously think that during the European Semester, the EU has to demonstrate its ability to give long-term answers to problems emerging in the wake of the financial crisis. This is extremely important in soothing markets.
After the presentation of the Presidency’s programme, the ECOFIN reviewed procedural issues related to the six legislative proposals. The meeting also discussed the work of the Euro-group developing the future permanent stability mechanism. The Euro-group and the Commission will develop regulations on inter-governmental stability tools by March. Member states outside the euro zone may participate in the operations of the stability mechanism on an ad hoc basis.
Stricter bank stress tests
Hungary took over the presidency in a rather difficult time, when the EU has to give an efficient and comprehensive answer to the sovereign debt crisis; which has hit several member states. But the Presidency set up an ambitious work programme, EU Commissioner for Economic and Financial Affairs Olli Rehn, told the press conference after the Ecofin meeting. Mr Rehn explained that European banks will undergo a new set of stress tests under the aegis of the recently launched European Monitoring System in the first half of 2011. In this context, the Commission confirmed its full support to the Hungarian Presidency in its ambition to make financial markets more transparent and to reduce system-level risks.
Commissioner for Internal Market, Michel Barnier, praised the Presidency’s courage in respect of the bank stress tests. Mr Barnier appreciated the Presidency’s intention to adopt a more strict and authentic procedure, learning from the experience of the two previous tests.
Referring to the debate at the Council’s meeting, Mr Barnier said that member states managed to reach an agreement over the key principles of the stress test; including full transparency of the results, due consideration of sovereign risks and liquidity, and a uniform application of the test in all member states.
The Council meeting passed the Hungarian Presidency’s first piece of economic and financial legislation. The items on the agenda adopted without a debate included a political agreement on the enforcement regulation of the VAT Directive, which the Council can formally ratify at a later stage, after finalisation by lawyer-linguists.