A STABILITY pact to maintain financial discipline after the introduction of the euro may now be agreed in time for the Dublin EU summit, the president of the European Commission, Mr Jacques Santer, said yesterday.

Praising the work of the Government in preparing for the gathering, Mr Santer said he also expected a basic framework for the Union's enlargement to emerge at the Dublin summit next month.

Mr Santer stressed that one of the main challenges facing the EU was its enlargement and the changes in its structures needed to cope with this.

"We need to reach some formal conclusions at Dublin," he said. "The Irish presidency would put forward the framework of a new treaty, of course with many brackets.

"I do not think we can have an agreement as a whole, but it is important to have a basis for the Dutch presidency," he continued.

Mr Santer said there were three main areas to deal with for a future treaty:

. reform of the Union's institutions in the context of an increased membership;

. the design of a common foreign and external security policy;

. and internal security measures to combat serious crime.

The Irish Government was working hard on a framework, he said, and the EU should endorse this at the Dublin summit.

The gathering should also endorse three financial proposals, Mr Santer added, one dealing with the legal statute of the euro, another creating a mechanism to ease the initial stages of the single currency where some countries would be in and some out, and a third, a stability pact.

He said that while most elements of these measures were agreed, two sticking points to do with the stability pact remained.

The first was the amount of the fine, or sanction, if a country breached the agreement.

The second revolved around the "exceptional circumstances" necessary before a country could legitimately depart from the pact's set limits. Mr Santer said there was still disagreement on the proportion of the requisite economic downturn.