On the 4th of December 2012, Minister of Finance, the Economy and Investment, Tonio Fenech, attended a meeting of the Economic and Financial Affairs Council (ECOFIN) in Brussels. He was accompanied by Malta’s Permanent Representative to the European Union, Ambassador Marlene Bonnici, and the Permanent Secretary in the Ministry of Finance, the Economy and Investment, Mr Alfred Camilleri.

The meeting discussed a number of ongoing legislative proposals aimed at strengthening the economic and financial architecture of the European Union. Additionally, the Council adopted a final decision to close Malta’s excessive deficit procedure, reflecting the Government’s sound and credible fiscal policies over the past few years as well as the country’s solid economic outlook.

Finance Ministers had an exchange of view on the proposal for establishing a Single Supervisory Mechanism (SSM) for the oversight of credit institutions, consisting of two proposed regulations: One would give certain supervisory tasks to the European Central Bank (ECB), while the other would modify the mandate of the European Banking Authority (EBA).

Minister Tonio Fenech emphasised that small Member States should retain adequate voting rights in the EBA’s structure and supported the Commission proposal to maintain the voting structure as it currently stands. Turning to the ECB Regulation, Malta stressed that the voting modalities within the Supervisory Board should be based on a one member, one vote system as is the current situation in the ECB Governing Council.

Ministers also discussed the pressing need to bolster the European Union’s economic and financial architecture. In this respect, the meeting addressed a few outstanding issues in reaching an agreement with the European Parliament on two draft regulations (known as the ‘two-pack’) aimed at strengthening economic governance in the Eurozone.

The ‘two-pack’ builds on a previous set of economic governance measures, known as the ‘six-pack’, which were adopted in November 2011. The two regulations aim at enhancing the budgetary and economic responsibility of Member States, especially those which are under the excessive deficit procedure and experiencing severe financial disturbance.

The meeting also addressed developments on a number of other issues, including a political agreement which was reached with the European Parliament on proposals amending the EU’s rules on credit rating agencies.

Finally, the Cyprus Presidency of the Council of the European Union announced that the European Parliament’s Committee on Budgets had recommended a vote in favour of the package deal on the annual general budget of the European Union for 2013 during a meeting which was running in parallel to the ECOFIN Council.

This recommendation confirms that a political agreement on the package deal has been brokered between the Council and European Parliament following the publication of a new draft budget from the Commission on 23 November 2012.

Included in the package is the agreement to also cover for the shortfalls in the 2012 appropriations that had been identified inter alia in the Erasmus, Cohesion Policy and Rural Development programmes. The package will now be formally adopted by the two arms of the budgetary authority in the coming days with the final step taking place at the European Parliament’s Plenary Session of 10-13 December 2012.

As is customary, the ECOFIN Council meeting was preceded on 3 December 2012 by a meeting of the Eurogroup which took stock of the situation in the Eurozone.

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