Ecofin meeting unlikely to choose IMF candidates

The Minister for Finance, Mr McCreevy, has predicted that European Union finance ministers are unlikely to declare which candidates they are backing to lead the International Monetary Fund (IMF) at their meeting in Punchestown, Co Kildare, today.

Mr McCreevy had hoped that a discussion of the appointment over lunch today would produce a shortlist of candidates for the post, which is traditionally occupied by a European.

He acknowledged yesterday, however, that a number of countries were not yet ready to put candidates forward.

"It may be a while before we have a clear idea of the runners in this particular race," he said.

Spain's outgoing finance minister, Mr Rodrigo Rato, is the only European candidate to have been nominated for the IMF post, but France and Germany are expected to back Mr Jean Lemierre, the head of the European Bank for Reconstruction and Development, and Italy has suggested that it will also nominate a candidate.

Mr McCreevy said that the ministers would endeavour over the coming weeks to agree on a candidate but he recalled that the EU had failed in the past to unite around a single candidate.

Speaking after a meeting of euro-zone finance ministers in Punchestown yesterday, Mr McCreevy echoed the European Central Bank's prediction that the economic recovery would gather pace in the coming months.

Last night, he played down the significance of yesterday's Exchequer figures, stressing that they only represented the first quarter and indicated that his Budget was on target.

If Mr McCreevy faces criticism for being too conservative in his Budget, other member-states have made clear that they will once again exceed the Stability and Growth Pact's 3 per cent limit on budget deficits.

"The euro group agreed that continued fiscal discipline is important to underpin growth in our economies in the period ahead, along with a renewed commitment to structural reforms as set out in the Lisbon Agenda," he said.

The Economic and Monetary Affairs Commissioner, Mr Pedro Solbes, said that economic growth for 2004 was likely to be around 1.7 per cent, very slightly short of the Commission's most recent forecast. Mr Solbes said that consumer spending remained sluggish and was unlikely to pick up as rapidly as other factors.

"Low consumption is being accompanied in Europe by high savings. In our view, the deterioration in public finances, in particular the increasing debt levels, and the slow progress of structural reforms, are among the factors influencing negatively on consumer confidence," he said.

Mr Solbes said there was virtually no improvement in national budgets within the euro zone and warned governments against cutting taxes or increasing spending to boost economic growth.

"We are all concerned about the low growth in the euro area. But, in the Commission's view, the road to growth goes through difficult decisions on structural reforms and not through short-term measures that pretend to stimulate demand," he said.

Mr Solbes declined to comment on this week's regional election results in France, which appeared to represent a rejection of economic reforms, but Mr McCreevy said that "changing the status quo is always difficult in a representative democracy".

Mr McCreevy paid tribute to Mr Solbes, who is attending his last meeting of finance ministers before leaving Brussels to become Spain's finance minister.

"Mr Solbes has, without fear or favour, fulfilled his role as Commissioner in a scrupulously fair manner - as I know from personal experience," Mr McCreevy said.