Deal near on eurozone economic governance laws, says Rehn

12.02.13 @ 09:47

  1. By Benjamin Fox
  2. Benjamin email

BRUSSELS - MEPs and ministers are on the verge of agreement on far-reaching economic governance proposals for eurozone states, according to EU economic commissioner Olli Rehn.

The proposals give the commission more powers to scrutinise national budgets and demand changes to national debt and deficit reduction programmes.

Speaking with reporters after a meeting of euro finance ministers on Monday (11 February), Rehn said that "a positive conclusion … is within reach."

He added that the files are "important in their own right, but also because they are an essential foundation for further progress in rebuilding our economic and monetary union."

MEPs on the European Parliament's economic and monetary affairs committee voted on the legislation - known as the "two-pack" - in June 2012.

But the talks stalled over the parliament's insistence on retaining a clause calling on the commission to propose the creation of a Redemption Fund to pool around €2.3 trillion of eurozone government debt exceeding the 60 percent limit set out in the Stability and Growth Pact.

Germany leads a group of countries strongly opposed to any moves towards a system of debt mutualisation.

Instead, Germany says it could accept a formula where member states remain liable for their own debt and table detailed plans on how they plan to reduce it.

MEPs remain strongly in favour of moving towards a system of common eurobonds, arguing that they could reduce speculative attack against individual countries on the bond market and lower borrowing costs.

But the topic is a taboo at least until German general elections on 22 September.

The parliament had also called on the commission to table legislative proposals worth 1 percent of GDP to fund infrastructural investment to boost job creation and economic growth.

Meanwhile, eurozone finance ministers reiterated their commitment to finalising a bail-out package for Cyprus before the end of March, after a new government takes office following presidential elections.

Jeroen Dijsselbloem, the Dutch finance minister and newly elected chair of the eurogroup, said that he first wants representatives of the troika - the EU commission, European Central Bank and International Monetary Fund - and the Cypriot government to agree on the terms of reference for a detailed assessment by a commercial audit firm on the Mediterranean island's implementation of anti-money laundering legislation.

Dijsselbloem also revealed that the French government aims to instigate a debate on whether leaders should agree an exchange rate policy for the euro.

He said the talks would take place at the upcoming meeting of the G20 in Moscow starting Friday (15 February). Germany, in particular, is against the idea.