Ecofin to debate oil, deficits

Record-high oil prices and their effect on growth will top the agenda at the Council of European Finance Ministers (Ecofin), which convenes today in Luxembourg, as well as the Eurogroup of the ministers of the 12 eurozone members. Greece’s demand for a reduction in fuel consumption tax is not on the agenda and is unlikely to be debated, even informally, thus ending any hopes of a big drop in Greek fuel prices in the near future. Today’s Ecofin session will discuss the European Commission’s decision to begin an excessive deficit procedure against the Netherlands, under the terms of the Stability and Growth Pact. The Pact calls on all eurozone members to avoid budget deficits in excess of 3 percent of their gross domestic product (GDP). The Netherlands’ budget deficit for 2003 was equal to 3.2 percent of its GDP. The Commission has decided that the deficit is not a one-off occurrence, due to unforeseen circumstances or a recession and it forecasts that the Netherlands will continue posting excessive budget deficits in 2004 and 2005. This process also concerns Greece, whose 2003 deficit also exceeded 3 percent of its GDP. However, Greek Finance Ministry officials are searching for possible surpluses in public utilities and pension funds (the so-called «white hole») which could bring the 2004 deficit under 3 percent, despite the heavy expenditure incurred by the Olympic Games. The current government had repeatedly derided its predecessors’ similar practices but, now needing to present a deficit that does not violate the rules of the Stability Pact, it is eager to follow the same strategy. Ecofin will examine Greece’s public finances on July 5.