Written Answers. - EMU Schedules.
Ivor Callely
Question:
58
Mr. Callely
asked the
Minister for Finance
the schedules required to meet the conditions of entry into Economic and Monetary Union for January 1999; the schedule which will be adhered to in order to enter economic and monetary union; and if he will make a statement on the matter.
[4071/97]
The third stage of economic and monetary union, European Monetary Union, is due to commence on 1 January 1999. On that date, the single currency, the euro, will come into being and the exchange rates of the currencies of the member states participating in Economic and Monetary Union will be irrevocably fixed against it.
The Treaty on European Union sets out criteria by reference to which member states' fitness for participation in economic and monetary union, in terms of achievement of a high degree of sustainable convergence, will be judged. Briefly, the criteria are:
(i) the general Government deficit must not exceed 3 per cent of GDP unless it has declined substantially and continuously and reached a level close to 3 per cent, or unless the excess over 3 per cent is small, exceptional and temporary;
(ii) the ratio of general Government debt to GDP must be below 60 per cent or, if above, must be sufficiently dimishing and approaching 60 per cent at a satisfactory pace;
(iii) price performance must be sustainable and, for a year before the examination of fitness for economic and monetary union, average inflation — as measured by the consumer price index on a comparable basis — must not exceed by over 1.5 per cent that of the three best-performing member states;
(iv) for a year before the examination, the average nominal long-term interest rate must not exceed by more than 2 per cent that of the three best-performing member states in terms of price stability; and
(v) the currency must without severe tensions have respected the normal fluctuation margins of the ERM for two years before the examination and its central rate must not have been devalued on the member state's initiative against any other member state's currency in that period.
The European Commission and the European Monetary Institute will report on the achievement of a high degree of convergence by reference to the fulfilment by member states of these criteria. These reports will also take account of the compatibility of member states' legislation with the Treaty requirement for Central Bank independence, the development of the ECU, the results of integration of the markets, the situation and development of the balance of payments on current account and an examination of the development of unit labour costs.
In spring 1998, the Council, meeting in the composition of the heads of state or Government will decide, taking due account of these reports and the opinion of the European Parliament and on the basis of ECOFIN recommendations, which member states fulfil the necessary conditions for the adoption of a single currency. The decision of Council will be based on the most recent and reliable data for 1997.
It is Government policy that Ireland should continue to meet the conditions for entry into economic and monetary union.
