Declaration by the Council (Ecofin) and the Ministers meeting in that Council issued on 1 May 1998
Date: 1998-05-01
Institutions: Council of the European Union
Subjects: Economic and Monetary Union, budget policy, coordination of EMU policies, economic convergence, euro, public finance

L 139/28

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EN

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Official Journal of the European Communities

11. 5. 98

DECLARATION BY THE COUNCIL (ECOFIN) AND THE MINISTERS
MEETING IN THAT COUNCIL

issued on 1 May 1998

(Ecofin)

1. On 1 January 1999, the euro will be a reality, marking
the end of a process culminating in the fulfilment of
the economic conditions necessary for its successful
launch. The Council
and the ministers
meeting in that Council welcome the significant
progress that has been made in all Member States in
achieving price stability and sounder public finances.
The convergence process has contributed to a high
degree of exchange-rate stability and historically low
interest rates, and thus to the improved economic
conditions in our economies.

2. The move to the single currency enhances further the
conditions for strong, sustained and non-inflationary
growth conducive to more jobs and rising living
standards. It eliminates the exchange-rate risk among
participating Member States, reduces transaction costs,
creates a broader and more efficient financial market,
and increases price transparency and competition. It
thus provides the decisive step for a truly single
market.

3. We,

the ministers, are strongly committed to the
actions necessary to realise the full benefits of
economic and monetary union and the Single Market
in the interest of all our citizens. These actions include
closer coordination of economic policies. We are
confident that the full implementation of the conclu-
sions of
the Dublin, Amsterdam and Luxembourg
European Councils provides a sound basis for a per-
manently high degree of financial stability and the
smooth functioning of EMU.

4. For the coming years, strong, sustained and non-infla-
tionary growth will continue to be based in all Member
States on economic convergence. Moreover, sound and
sustainable public finances are prior conditions for
growth and higher employment. The Stability and
Growth Pact provides the means for securing this
objective and for increasing the scope in national
budgets to deal with future challenges.

5. In accordance with that Pact, we will start to imple-
ment
the
the Regulation on the strengthening of
surveillance of budgetary positions and the surveillance
and coordination of economic policies (1) on 1 July
1998 in the following way:

(1) Council Regulation (EC) No 1466/97 of 7 July 1997 (OJ L

209, 2. 8. 1997, p. 1).

— we are committed to ensure that

budget objectives set
necessary by taking timely corrective action,

for 1998 are fully met,

the national
if

— the Council agrees to have an early consideration
of Member States’ budgetary intentions for 1999 in
light of
the
Stability and Growth Pact.

the framework and objectives of

two points,

the ministers of

the
On these first
States participating in the euro area have decided
to meet informally, in the course of the coming
months,
their monitoring work in ac-
cordance with the Luxembourg European Council
resolution,

to start

— if

economic

conditions develop better

than
expected, Member States will use the opportunity
to reinforce budgetary consolidation so as to reach
the medium-term objective of government finan-
cial positions close to balance or in surplus, as
embodied in the commitments of the Stability and
Growth Pact,

— the higher the debt-to-GDP ratios of participating
Member States, the greater must be their efforts to
reduce them rapidly. To that end, in addition to
maintaining appropriate levels of primary surpluses
in compliance with the commitments and the
objectives of the Stability and Growth Pact, other
measures to reduce gross debt should be put in
place. Furthermore, debt management strategies
should reduce budgets’ vulnerability,

— each of the ministers undertakes to submit, at the
latest by the end of 1998, national stability or
convergence programmes which will reflect these
important elements.

6. The Council

reiterates

the responsibility for
that
budgetary consolidation lies and remains with the
Member States and that, in accordance with the provi-
sions of Article 104b(1) TEC, the Community in par-
ticular shall not be liable for or assume the commit-
ments of Member States. Without prejudice to the
objectives and provisions of the Treaty, it is agreed that
economic and monetary union as such cannot be
invoked to justify specific financial transfers.

11. 5. 98

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Official Journal of the European Communities

L 139/29

7. Our work on budgetary consolidation will be comple-
mented by increased efforts for improving the effici-
ency of our economies so as to enhance the favourable
environment for growth, high employment and social
cohesion. In this context, we look forward to our
meeting shortly with the social partners on economic
and monetary union. Together with the social partners
and all other concerned parties, we will take all neces-
sary initiatives to create the conditions for combating
the
unemployment, particularly for young people,
long-term unemployed and the low skilled. In fol-
lowing up the conclusions of the Luxembourg meeting
of the European Council, we commit ourselves to play
the national
our part
Employment Action Plans drawn up in the light of the
employment policy guidelines. The Council (Ecofin)
these plans
will consider
in contributing to the
preparation of
the Cardiff European Council and
subsequent European Councils.

in implementing rapidly

8. We will attach particular importance to increasing the
degree to which growth can be translated into addi-
tional employment. We will thus put emphasis, inter
alia, on the following structural reforms:

— making product, labour and capital markets more

efficient,

— improving the adaptability of labour markets in
order to better reflect wage and productivity de-
velopments,

— ensuring that national education and training
systems are effective and relevant to employment,

— seeking to encourage entrepreneurship, notably by
attacking the administrative obstacles which it
faces,

— enabling easier access to capital markets and to
funds, particularly for small and

venture capital
medium-sized enterprises,

— increasing tax efficiency and avoiding harmful tax

competition,

— addressing all aspects of social security systems in

view of ageing populations.

9. The Council

intends to establish a light procedure,
fully respecting the subsidiarity principle, for monit-
oring progress on economic reform. From next year,
the preparation of the broad economic policy guide-
lines will draw on short assessments of progress and
plans by Member States and the Commission on
product and capital markets, as well as on the employ-
ment action plans.