Ministers van Financiën bespreken hoge olie- en voedselprijzen (en)

For the last time under the Slovenian EU Presidency, the Slovenian Minister of Finance and current President of the Economic and Financial Affairs Council (ECOFIN), Dr Andrej Bajuk, chaired the ECOFIN Council i meeting held today in Luxembourg, and wished the future President, French Minister of Finance Christine Lagarde, successful work.

The ministers focused on the effects of the dramatic increases in food prices witnessed in 2007 and 2008 in the EU and worldwide, which primarily affect the poorest people. The reasons are complex and for the most part originate outside the EU. Agricultural markets are still faced with a demand which exceeds supply, and this entails the risk of further price rises. It was agreed that appropriate measures must be introduced to increase the supply and help reduce pressure on rising food prices in the EU:

short-term measures: several short-term measures have been adopted under the common agricultural policy. It was also agreed that measures to mitigate the temporary impact on lowest income households must be short-term and target-oriented; mid-term and long-term measures: the ministers agreed that the market orientation of agriculture must be increased, the sustainability of the global biofuels policy ensured, and agricultural productivity growth increased. In the Member States, competition in the food-production chain must be strengthened, as national food distribution and retail sale sectors are still segmented and experience market concentration.

The ministers were of opinion that the future will also bring higher oil prices, so they concluded that solutions must be sought for the adaptation of the European economy. In this framework they confirmed the necessary observation of the so-called Manchester agreement of 2005 which obliged the ministers of finance to efficiently coordinate the responses to the growing oil prices and to avoid the introduction of distorting fiscal and other interventions, for these prevent the necessary adaptation of economic operators. They decided that the potential measures for relieving the consequences of the increased oil prices targeting the poorest population segment must be of short-term nature and aim-oriented.

The ministers will continue to carefully monitor the development of food and oil prices; furthermore, these two topics will be on the agenda of the European Council meeting on 19 and 20 June.

Over lunch, the ministers discussed the economic situation and the situation on the financial markets. Reviewing the situation on the financial markets has been a standing priority of the Slovenian Presidency. The EU is currently facing a number of shocks: the prices of raw materials, the impact of the financial shake-up and the exchange rate of euro. The EU is well able to handle these challenges as its economic foundations are sound and there are no major imbalances. Data on growth in the first quarter are better than expected and the forecasts show that, in 2008, growth will be close to potential. Uncertainties on the financial markets are continuing, and Dr Bajuk pointed out that, although the global financial shake-up led to the credit crunch, there is an appreciable continued high growth of loans to households and non-financial institutions in the EU. With regard to the work of the Slovenian Presidency, he stressed, "The comprehensive working plan adopted last October in response to the shake-up is being implemented as planned and will be completed by the end of 2008. We have highlighted the primary role of private-sector solutions; solutions are currently being evaluated. Some shortcomings that have been identified will be discussed in the context of the planned amendments to the Capital Adequacy Directive."

The Slovenian Presidency presented a report on progress in the review of the Solvency II Directive, which will regulate the start-up and operation of insurance and reinsurance businesses. This is the key framework directive in the field of financial services (together with the Directive on Capital Adequacy for the banking sector). The capital adequacy requirements for insurance companies have been in force since the 1970s. They need to be adapted to the current development of insurance, risk management, modes of financing, international financial reporting and prudential standards. Minister Bajuk commended the successful work of the Slovenian Presidency, "In January we started to discuss the Commission proposal within the Council and we have succeeded in achieving some major milestones on the way to political consensus in the second half of the year, which will strengthen the competitiveness of the European insurance industry while also respecting its diversity. At the end of the Slovenian Presidency, seven of the 313 Articles in the Directive remain unresolved. When consensus on these seven articles has been reached, the Directive may be adopted." The principal open issues remain the calculation of the minimum required capital, group support, supervision and surplus resources.

On the basis of their assessment of the economic situation, the Ministers established that Slovakia meets the required criteria to be able to introduce the euro on 1 January 2009. The necessary legal bases will be adopted at the meeting of Ministers of Finance on 8 July.

At the close of the meeting the French Minister of Finance, Mrs Christine Lagarde who will take over the presidency of ECOFIN on 1 July, thanked Minister Bajuk and said that he set an excellent example by his efficient chairing and good organisation spiced with a sense of humour. At the same time she expressed his commendation for an excellent Presidency, both to him in person and to his cooperators at the Presidency project. The Minister thanked her and stressed that the role of the president of the ECOFIN was an extraordinary challenge at the end of which he found out that things do change regardless of the long sessions and small progress they bring.