Key elements of pact agreed

THE EU finance ministers should be able to present substantive conclusions on EMU to the EU leaders at the Dublin summit meeting in December, according to the Minister for Finance, Mr Quinn.

Many key elements of the stability pact - the rules governing member states once they enter EMU - had been agreed, he said, while the new ERM was coming close to its final shape. The legal framework for the euro was also at an advanced stage, he said in a speech in Berlin yesterday.

While some issues relating to the stability pact remained to be sorted out, Mr Quinn told the meeting, organised by the SPD, that all member states agreed on the importance of budgetary discipline and stability-oriented policies.

There was also broad agreement that member states not in EMU, as well as those which are members of the single currency, should be obliged to submit convergence programmes, he said.

On the key issue of how to deal with excessive budget deficits, Mr Quinn said the pact aimed "more at discouraging excessive deficits than at punishing them".

Where sanctions had to be imposed, Mr Quinn said there was a consensus at the recent meeting of EU finance ministers in Dublin that member states with excessive deficits should first have to make a non-interest-bearing deposit and, after two years, that should be converted into a fine if the deficit was not lowered.

The exact level of the fines and the way they would be implemented have to be agreed, he said.

Significant further progress was also made at the Dublin meeting on the structure of the new ERM, he said.