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		52014DC0425

			Recommendation for a COUNCIL RECOMMENDATION on Slovenia’s 2014 national reform programme and delivering a Council opinion on Slovenia’s 2014 stability programme /* COM/2014/0425 final  - 2014/ () */

Recommendation for a
COUNCIL RECOMMENDATION
on Slovenia’s 2014 national reform
programme
and delivering a Council opinion on Slovenia’s 2014 stability programme

THE COUNCIL OF THE EUROPEAN UNION,
Having regard to the Treaty on the
Functioning of the European Union, and in particular Articles 121(2) and 148(4)
thereof,
Having regard to Council Regulation (EC) No
1466/97 of 7 July 1997 on the strengthening of the surveillance of budgetary
positions and the surveillance and coordination of economic policies[1], and in particular
Article 5(2) thereof,
Having regard to Regulation (EU) No
1176/2011 of the European Parliament and of the Council of 16 November 2011 on
the prevention and correction of macroeconomic imbalances[2], and in particular
Article 6(1) thereof,
Having regard to the recommendation of the
European Commission[3],
Having regard to the resolutions of the
European Parliament[4],
Having regard to the conclusions of the
European Council,
Having regard to the opinion of the
Employment Committee,
Having regard to the opinion of the
Economic and Financial Committee,
Having regard to the opinion of the Social
Protection Committee,
Having regard to the opinion of the
Economic Policy Committee,
Whereas:
(1)
On 26 March 2010, the European Council agreed to
the Commission’s proposal to launch a new strategy for growth and jobs, Europe
2020, based on enhanced coordination of economic policies, which will focus on
the key areas where action is needed to boost Europe’s potential for
sustainable growth and competitiveness.
(2)
On 13 July 2010, the Council, on the basis of
the Commission's proposals, adopted a recommendation on the broad guidelines
for the economic policies of the Member States and the Union (2010 to 2014)
and, on 21 October 2010, adopted a decision on guidelines for the employment
policies of the Member States, which together form the ‘integrated guidelines’.
Member States were invited to take the integrated guidelines into account in
their national economic and employment policies.
(3)
On 29 June 2012, the Heads of State or
Government decided on a Compact for Growth and Jobs, providing a coherent
framework for action at national, EU and euro area levels using all possible
levers, instruments and policies. They decided on action to be taken at the
level of the Member States, in particular expressing full commitment to achieving
the objectives of the Europe 2020 Strategy and to implementing the
country-specific recommendations.
(4)
On 9 July 2013, the Council adopted a
recommendation on Slovenia’s national reform programme for 2013 and delivered
its opinion on Slovenia’s updated stability programme for 2012-2016. On 15
November 2013, in line with Regulation (EU) No 473/2013[5], the Commission presented its opinion on Slovenia's draft budgetary
plan for 2014[6].
(5)
On 13 November 2013, the Commission adopted the
Annual Growth Survey[7],
marking the start of the 2014 European Semester of economic policy
coordination. On the same day, on the basis of Regulation (EU) No 1176/2011, the
Commission adopted the Alert Mechanism Report[8],
in which it identified Slovenia as one of the Member States for which an
in-depth review would be carried out.
(6)
On 20 December 2013, the European Council
endorsed the priorities for ensuring financial stability, fiscal consolidation
and action to foster growth. It underscored the need to pursue differentiated,
growth-friendly fiscal consolidation, to restore normal lending conditions to
the economy, to promote growth and competitiveness, to tackle unemployment and
the social consequences of the crisis, and to modernise public administration.
(7)
On 5 March 2014, the Commission published the
results of its in-depth review for Slovenia[9],
under Article 5 of Regulation (EU) No 1176/2011. The Commission's analysis leads
it to conclude that Slovenia continues to experience excessive macroeconomic
imbalances, which require monitoring and continuing strong policy action. While
imbalances have been unwinding over 2013 due to macroeconomic adjustment and
policy action by Slovenia, the magnitude of the necessary correction means that
substantial risks are still present. More specifically, the risks stemming from
an economic structure characterised by weak corporate governance, a high level
of state involvement in the economy, losses in cost competitiveness, a
corporate debt overhang and a considerable increase in government debt warrant
very close attention. While considerable progress has been made in repairing
the banks' balance sheets, determined action with respect to full
implementation of a comprehensive banking sector strategy, including
restructuring, privatisation and enhanced supervision, is still required.
(8)
On 15 April 2014, Slovenia submitted its 2014 national
reform programme and on 24 April 2014 its 2014 stability programme. In order to
take account of their interlinkages, the two programmes have been assessed at
the same time.
(9)
The objective of the
budgetary strategy outlined in the 2014 Stability Programme is to correct the
excessive deficit by 2015 and reach the medium-term objective by 2017. The
programme confirms the previous medium-term objective of a balanced budget,
which is in line with the requirements of the Stability and Growth Pact.
However, the (recalculated) structural balance is not expected to reach the
medium-term objective by 2017. The programme plans to bring the deficit below
3% of GDP in 2015, in line with the target set in the Excessive Deficit
Procedure recommendation. Beyond 2015, the programme envisages a steady decline
in the deficit before turning to a surplus of 0.3% of GDP in 2018. The programme
projects that the government debt will peak at 81.1% of GDP in 2015 before
dropping to 76% in 2016. Overall, the budgetary strategy outlined in the
programme is in line with the requirements of the Stability and Growth Pact.
The macroeconomic scenario underpinning the budgetary projections in the
programme, which has been produced by an independent body (the Institute for
Macroeconomic Analysis and Development), is cautious. On 5 March 2014, an
Autonomous Commission Recommendation was addressed to Slovenia. The stability
programme identifies some additional measures that assist in narrowing the gap
with the required fiscal effort. Based on this, it is considered that the
stability programme has partially responded to the Autonomous Commission Recommendation.
Nevertheless, downside risks remain as the measures underpinning the programme
are insufficiently detailed, and many of them have yet to be adopted. Any
potential additional bank recapitalisation needs, stemming from the 2013 asset
quality review and stress test in Slovenia, would increase the deficit and debt
ratios, while any proceeds from the successful privatisation of state owned
entities or banks that have not been incorporated in programme projections
would reduce the debt burden. Based on the Commission forecast, the fiscal
effort over the period 2013-2014 falls short by 1.4% of GDP in terms of
(corrected) change in the structural balance and by 0.5% of GDP in terms of the
amount of required measures estimated as necessary at the time of the Excessive
Deficit Procedure recommendation. For 2015, while the programme projects a
deficit in line with the Excessive Deficit Procedure recommendation, the Commission
2014 spring forecast estimates a deficit of 3.1% of GDP. Moreover, based on the
forecast, the fiscal effort measured both by the (corrected) change in
structural balance and by the underlying amount of discretionary measures to be
implemented  is expected to fall somewhat short of the level recommended by the
Council for 2015. Based on its assessment of the programme and the Commission
forecast, pursuant to Council Regulation (EC) No 1466/97, the Council is of the
opinion that additional efforts, in 2014 and thereafter, are required in order
to ensure full compliance with the Excessive Deficit Procedure recommendation,
including the required structural effort.
(10)
With respect to the fiscal rules, in 2013 the
parliament approved a constitutional basis for establishing a general
government budget balance / surplus rule in structural terms. However, the
necessary implementing legislation, namely the Fiscal Rule Act, which was
supposed to be in place by November 2013, has yet to be adopted. In particular,
the necessary legal basis has to be established in order to define the role,
remit and independence of a functioning Fiscal Council.
The timely completion of a comprehensive expenditure review of all budgetary
users in the key expenditure area of health could identify measures to underpin
the fiscal consolidation and identify options for enhancing efficiency and cost
effectiveness..
(11)
In 2013, it was recommended to Slovenia to strengthen
the long-term sustainability of the pension system and improve the efficiency,
cost effectiveness and quality of the long-term care sector. Slovenia has made
limited progress on measures taken to address this recommendation. An evaluation of the 2012 pension reform was
completed in April 2014 and the first findings are positive. While certain
fiscal savings have been realised, the level of pensions remained unchanged. Slovenia
faces high fiscal sustainability risks in the medium and long term mainly due to an increase in ageing-related spending
implied by Slovenia's demographics. Thus the pension and long-term care systems
will need to be reformed in the medium term if overall expenditure is to be
stabilised over the medium and long term while ensuring the adequacy of
pensions and access to long-term care services.  The
authorities plan to prepare a White Paper for a comprehensive pension reform. A
blueprint for a long-term care reform was adopted at the end of 2013 and the
related legislation is expected by the end of 2014. However, it risks being delayed
because the on-going reorganisation of healthcare insurance is lagging behind.
(12)
The situation on the labour market has worsened.
Unemployment reached 10.3% in 2013 and youth unemployment climbed to 21.6% in
2013 while the proportion of young people not in employment, education or
training increased by 2.1 pps between 2011 and 2013. The evaluation of the labour
market reform adopted in 2013 points towards decreasing segmentation between
permanent and fixed-term contracts, albeit on the back of an increased use of
other non-permanent contractual forms, while the effect of incentives for the
employment of older and younger people are still unclear. Labour market
segmentation is also being addressed through better regulation of student work.
While a new act is pending approval, concerns remain about whether it will
adequately address shortcomings of previous rules. The
government has made limited progress in implementing last year's recommendation
on the minimum wage, which continues to be indexed only
to inflation, while the act on minimum wage allows for indexation to other
economic conditions. Limited progress has been made in developing effective
tailor-made active labour market policy measures and addressing skills
mismatches.
(13)
The government has made substantial
progress in addressing the recommendations regarding stability
in the banking sector, conducting a credible Asset Quality Review and Stress
Test, prompt recapitalisations, and the transfer of non-performing loans to the
Bank Asset Management Company. However, the work is far
from complete and determined action to finalise and implement
a comprehensive banking sector strategy as announced in December 2013,
including restructuring, privatisation and enhanced supervision, is required. The level of non-performing loans in the banking system remains
high. It is therefore important for the banks to build internal work-out capacity
for non-performing loans including strengthening the
internal asset management and restructuring units, to accelerate the processing
of non-performing loans while maximising recovery value and preserving viable
businesses. Any further transfer of non-performing loans to the Bank Asset Management Company needs to be carefully designed in order to facilitate swift and efficient
restructuring of corporate credits, particularly in the case of complex,
inter-connected group loans. A comprehensive management strategy and business
plan that would substantiate redemption targets for the Bank Asset Management Company is awaited. Building on the lessons from the asset quality review and stress test, further
decisive measures to improve governance and supervision for all banks and
particularly for those remaining in State ownership are warranted by
strengthening risk management, enhancing credit approval processes and
improving data quality and availability, with the objective to reduce the
levels of non-performing loans and to contain future risks.
(14)
The government has made limited progress in
implementing the recommendations on corporate governance of state-owned
enterprises, which account for one sixth of total value added and form a
complex nexus of domestic banks, insurance groups and non-financial
corporations, with significant cross-shareholding. The
level of state influence creates significant risks for the public finances both
directly and indirectly, through liabilities from guarantees. A coherent
strategy for the management of state-owned enterprises coupled with improved corporate governance would create a more
favourable environment for attracting foreign direct investment. Although first
steps were taken by compiling an initial list of 15 companies for accelerated
privatisation in May 2013, progress to date has been mixed and there is a significant
risk that deadlines will not be met. With delay, the new legislation
underpinning the Slovenia Sovereign Holding, a vehicle for consolidating the
management of state ownership, were introduced in April 2014. A comprehensive
strategy and a precise classification of core and non-core assets, including those earmarked for privatisation, is awaited. There
is a need to identify and implement appropriate measures to secure the
restructuring process and the attainment of its goals including inter alia
maximising the recovery value for creditors and establish a list of the most
urgent restructuring cases for rapid work out
(15)
The insolvency framework was
amended in 2013 in order to facilitate the timely resolution of non-performing loans but the new framework remains largely untested. A high
level of indebtedness and financial distress has limited the corporate sector's
capacity to invest in future projects. The urgently needed financial and
operational restructuring of the corporate sector has yet to begin on a large
scale. A consolidated view of the various credit exposures in the banking
system is required to accelerate work-out of non-performing loans and to facilitate restructuring negotiations, particularly
in the case of complex, inter-connected group loans. A centralised task force with experienced representatives
of all stakeholders could take the initiative in supporting and accelerating this
process. In the meantime, swift and efficient closure of several on-going
urgent cases under the Bank Asset
Management Company is crucial.
(16)
Despite its potential,
Slovenia has one of the lowest stocks of foreign direct investment in the EU (34.1%
of GDP vs. 47.1% of GDP on average in the EU in 2012). While privatisation and
corporate restructuring offer many new possibilities for private investors,
there is evidence that the insufficiently developed business environment and
culture hinder Slovenia from taking full advantage of it. In 2012 a process of deregulation of regulated
professions started and until now, the number of regulated professions
decreased from 323 to 262. Further deregulation of regulated professions
would contribute to increasing the number of domestic and foreign services
providers and thus contribute to increased competitiveness. There is a potential to increase the coherence of
measures devised to improve the business environment and entrepreneurial
activities. In this context, the upcoming Smart Specialisation Strategy under
the European Investment and Structural Funds for 2014-20 will provide an
opportunity to focus on key measures such as creating tradable, innovative
products.
(17)
Slovenia is in the early stages of preparing
comprehensive public sector reform proposals (to be adopted by January 2015).
In this context, Slovenia has to restore the quality and credibility of public
administration. Slovenia has made some progress in improving the quality of the judicial system and has reduced the number of
pending cases. A reform of case management in commercial and civil justice has
improved the functioning of the court system. Recent positive trends in
litigious civil and commercial cases have been maintained.
(18)
In the context of the European Semester, the
Commission has carried out a comprehensive analysis of Slovenia’s economic
policy. It has assessed the stability programme and the national reform
programme. It has taken into account not only their relevance for sustainable
fiscal and socio-economic policy in Slovenia but also their compliance with EU
rules and guidance, given the need to reinforce the overall economic governance
of the European Union by providing EU-level input into future national
decisions. Its recommendations under the European Semester are
reflected in recommendations (1) to (8) below.
(19)
In the light of this assessment, the Council has
examined Slovenia’s stability programme, and its opinion[10] is reflected in
particular in recommendation (1) below.
(20)
In the light of the Commission's in-depth review
and this assessment, the Council has examined the national reform programme and
the stability programme. Its recommendations under Article 6 of Regulation (EU)
No 1176/2011 are reflected in recommendations (1) to (8) below.
(21)
In the context of the European Semester, the
Commission has also carried out an analysis of the economic policy of the euro
area as a whole. On the basis of this analysis, the Council has issued specific
recommendations for the Member States whose currency is the euro. Slovenia
should also ensure the full and timely implementation of these recommendations.
HEREBY RECOMMENDS that Slovenia take
action within the period 2014-2015 to:
1.
Reinforce the budgetary strategy with
sufficiently specified structural measures, for the year 2014 and beyond to
ensure correction of the excessive deficit in a sustainable manner by 2015 through
the achievement of the structural adjustment effort specified in the Council
recommendation under the Excessive Deficit Procedure. A durable correction of
the fiscal imbalances requires a credible implementation of ambitious
structural reforms to increase the adjustment capacity and boost growth and
employment. After the correction of the excessive deficit, pursue a structural
adjustment of at least 0.5% of GDP each year, and more in good economic
conditions or to ensure that the debt rule is met in order to put the high
general government debt ratio on a sustained downward path. To improve the
credibility of fiscal policy, complete the adoption of a general government
budget balance/surplus rule in structural terms, make the medium-term budgetary
framework binding, encompassing and transparent, and establish the necessary
legal basis for a functioning fiscal council defining its remit within the
budgetary process and introducing clear procedural arrangements for monitoring
budgetary outcomes as soon as possible. Launch a comprehensive review of
expenditure covering state and local government levels, direct and indirect
budget users and municipality-owned providers of utilities and services in the
area of health care by the end of 2014 with a view to realising budgetary
savings in 2015 and beyond.
2.
Based on the public
consultation, agree measures to ensure the sustainability of the pension system
beyond 2020, encompassing adjustments of key parameters, such as linking the
statutory retirement age to gains in life expectancy and encouraging private
contributions to the second pillar of the pension system. Contain age-related
expenditure on long-term care by targeting benefits to those most in need and
refocusing care provision from institutional to home care.
3.
Following consultation with social partners and
in accordance with national practices, develop a comprehensive Social Agreement
by the end of  2014 ensuring that wage developments, including the minimum
wage, support competitiveness, domestic demand and job creation. Redefine the
composition of the minimum wage and review its indexation system. Take measures
for further decreasing segmentation, notably addressing the efficiency of
incentives for hiring young and older workers and the use of civil law
contracts. Adopt the Act on Student Work. Prioritise outreach to non-registered
young people ensuring adequate public employment services capacities. To increase employment of low-skilled
and older workers, adapt the working environment to longer working life and
focus resources on tailor made active labour market policy measures, while
improving their effectiveness. Address skills mismatches by improving the
attractiveness of vocational education and training and by further developing
cooperation with the relevant stakeholders in assessing labour market needs.
4.
Complete the privatisation of NKBM in 2014 as
planned,  prepare Abanka for privatization in 2015, continue the prompt implementation
of restructuring plans of the banks in receipt of state aid and the necessary
consolidation of the banking sector. Based on the lessons from the asset
quality review and stress test finalise the comprehensive action plan for banks
in August 2014, including specific measures to improve governance, supervision,
risk management, credit approval process and data quality and availability.
Reinforce banks' capacity to work out non-performing loans by  strengthening
the internal asset management and restructuring units. Clarify the mandate of
the Bank Asset Management Company by publishing a comprehensive management
strategy and business plan by September 2014, detailing its role in
restructuring of its assets, redemption targets, budgets, asset management
plans and expected returns, while ensuring adequate resources.
5.
Continue to implement the privatisations
anounced in 2013 with the time-frames set. Adopt a strategy for the Slovenian
Sovereign Holding with a clear classification of assets in line with the
timeline and definitions established in the 2014 Slovenian Sovereign Holding
Act. By November 2014, commit to a short-term (one- to two- year horizon)
divestment schedule for a number of well-targeted assets with a clear time scale.
Make it fully operational as a vehicle for the management of assets remaining
in state ownership and divestment of the assets earmarked according to the management acts, within the time frame stipulated by the law. By September 2014, adopt and implement a corporate
governance code for state-owned enterprises to ensure professional, transparent
and independent management.
6.
Finalise a corporate restructuring master plan
by the end of 2014 with clear priorities and effective implementation process. Set
up a central corporate restructuring task force monitoring and coordinating the
overall restructuring process, providing the necessary expertise, guidance and
advice, and facilitating the negotiation process between all stakeholders
involved. Establish a list of the most urgent restructuring cases, while maximising
the recovery value for creditors. Promote the use of the available legal
mechanisms and international best practices to all stakeholders in the
restructuring process. Evaluate recent changes in the insolvency legislation by
September 2014, being ready to introduce any additional necessary measure.
Further reduce the length of judicial proceedings at first instance in
litigious civil and commercial cases including cases under the insolvency
legislation, and the number of pending cases, in particular enforcement and
insolvency cases.
7.
Reduce obstacles to doing business in Slovenia
in key areas for economic development rendering the country more attractive to
foreign direct investment particularly through accelerated liberalisation of regulated
professions, reduction of administrative burden including leaner authorisation
schemes. Ensure sufficient budgetary autonomy for the Competition Protection Agency
and increase its institutional independence. Streamline priorities and ensure consistency
between the 2011 Research and Innovation and the 2013 Industrial Policy
Strategies with the upcoming strategies on Smart Specialisation and Transport,
ensure their prompt implementation and assessment of effectiveness.
8.
Take effective measures
to fight corruption, enhancing transparency and accountability, and introducing
external performance evaluation and quality control procedures.
Done at Brussels,
                                                                       For
the Council
                                                                       The
President
[1]               OJ L 209, 2.8.1997, p. 1.
[2]               OJ L 306, 23.11.2011, p. 25.
[3]               COM(2014) 425 final.
[4]               P7_TA(2014)0128 and P7_TA(2014)0129.
[5]               OJ L 140, 27.5.2013, p.11.
[6]               C(2013) 8010 final
[7]               COM(2013) 800 final.
[8]               COM(2013) 790 final.
[9]               SWD(2014) 88 final.
[10]             Under Article 5(2) of Council Regulation (EC) No
1466/97


title: Council Recommendation of 12 July 2011 on the implementation of the broad guidelines for the economic policies of the Member States whose currency is the euro

text:
               23.7.2011

               EN

               Official Journal of the European Union

               C 217/15

         COUNCIL RECOMMENDATION
   of 12 July 2011
   on the implementation of the broad guidelines for the economic policies of the Member States whose currency is the euro
   2011/C 217/05
   THE COUNCIL OF THE EUROPEAN UNION,
   Having regard to the Treaty on the Functioning of the European Union, and in particular Article 136 in conjunction with Article 121(2) thereof,
   Having regard to the recommendation of the European Commission,
   Having regard to the conclusions of the European Council,
   After consulting the Economic and Financial Committee,
   Whereas:

               (1)

               On 20 June 2011, the Euro Group held a discussion on the implementation of the broad guidelines for the economic policies of the Member States whose currency is the euro (‘euro area Member States’), recognising the need further to strengthen within the Euro Group the policy coordination and the monitoring of the implementation of the recommendations addressed to those Member States whose currency is the euro.

               (2)

               On 26 March 2010, the European Council agreed to the Commission’s proposal to launch a new strategy for jobs and growth, Europe 2020, based on enhanced coordination of economic policies, which will focus on the key areas where action is needed to boost Europe’s potential for sustainable growth and competitiveness.

               (3)

               On 13 July 2010, the Council adopted a recommendation on the broad guidelines for the economic policies of the Member States and the Union (2010 to 2014). Member States and, where relevant, the EU were invited to take the guidelines into account in their economic policies.

               (4)

               On 12 January 2011, the Commission adopted the first Annual Growth Survey, marking the start of a new cycle of economic governance in the EU and the first European semester of ex-ante and integrated policy coordination, which is anchored in the Europe 2020 strategy.

               (5)

               On 25 March 2011, the European Council endorsed the priorities for fiscal consolidation and structural reform (in line with the Council’s conclusions of 15 February and 7 March 2011 and further to the Commission’s Annual Growth Survey). It underscored the need to give priority to restoring sound budgets and fiscal sustainability, reducing unemployment through labour market reforms and making new efforts to enhance growth. It requested Member States to translate these priorities into concrete measures to be included in their Stability or Convergence Programmes and National Reform Programmes.

               (6)

               On 25 March 2011, the European Council also invited the Member States participating in the Euro Plus Pact to present their commitments in time to be included in their Stability or Convergence Programmes and their National Reform Programmes.

               (7)

               In April and May 2011, the euro area Member States submitted their 2011 Stability Programmes covering the period 2011-2014 and their 2011 National Reform Programmes. These programmes have been assessed at the same time.

               (8)

               The experience of the first decade of the euro generally underlined the many benefits of the single currency. However, the global crisis resulted in a deep contraction in 2009, which sent euro area GDP below its 2006 level. While 2010 saw that GDP grow again, output still remains below that of 2007. As a consequence, euro area unemployment rose from 7,6 % in 2007 to 10,1 % in 2010. Public finances in the euro area deteriorated, triggering a significant reassessment of sovereign debt risks in some euro area Member States and bringing about risks to macro-financial stability. Growth is now recovering, with divergences between Member States reflecting both structural and cyclical differences. The crisis triggered reduction in macroeconomic imbalances which had developed before the crisis. However, it remains to be seen whether this is sufficient and sustainable.

               (9)

               General government balances in the euro area have, on average, begun to improve in 2010. Based on the Commission services’ spring forecast, assuming unchanged policies, they are expected to continue improving in 2011. However, public debt will continue to grow until 2012. If not corrected in the years to come, it may jeopardise long-term fiscal sustainability given the combination of low potential growth and unfavourable demographic developments. In 2010, the euro area deficit decreased to 6 % of GDP, while the debt ratio increased to 85,1 % of GDP. According to the 2011 Stability Programme targets, the euro area deficit would fall to 1,3 % of GDP in 2014 and the debt ratio would begin to decline again to below 85 % of GDP in 2014, after peaking in 2012. Such a path of fiscal consolidation for the euro area as a whole would be compatible with the agreed exit strategy and the need to return to sound public finances in the context of a strenghtening recovery. The planned emphasis of consolidation on expenditure reduction relative to tax increases enhances the likelihood of its success. Still, the effective implementation of some measures remains to be confirmed. Moreover, several euro area Member States have recently implemented new fiscal rules or announced the strengthening of existing ones, but these could in some euro area Member States require additional measures to be fully effective. In view of ageing populations, reforms of pensions and social security systems are not yet sufficient to ensure overall long-term fiscal sustainability.

               (10)

               The EU policy response has brought improvements to the functioning and stability of the financial system. Challenges in the financial sector in several euro area Member States include banks’ exposure to further losses on their asset holdings or a tightening of conditions on refinancing markets, the continuation of banking sector restructuring and recapitalisation. As conditions in the financial sector stabilise, public sector support to the banking sector will need to be phased out, while having due regard to the particular circumstances within the banking sectors of Member States. Addressing these challenges will help reduce uncertainties about contingent public liabilities.

               (11)

               Improvements in productivity and competitiveness and removing structural impediments to private domestic demand are needed to increase the growth potential of the euro area and to address the macroeconomic imbalances within the euro area. In this respect, euro area Member States announced a number of structural reforms in their National Reform Programmes. However, there are still shortcomings on measures needed to improve the functioning of their product and labour markets, notably regarding service sectors, growth-friendly fiscal consolidation, and the wage setting systems.

               (12)

               In order to ensure the proper functioning of EMU, euro area Member States are under a particular obligation to regard their economic policies as a matter of common concern due to the potential for spillover effects among countries sharing a common currency. Therefore, a more comprehensive and permanent overhaul of economic policy coordination at the EU and euro area level have proved necessary in light of the crisis and the current challenges. The integrated annual surveillance cycle enshrined in the ‘European Semester’, the strengthened economic governance framework, the creation of the European Systemic Risk Board and the European supervisory agencies, and the European Stability Mechanism are essential elements some of which remain to be fully adopted and/or implemented. The ‘Euro Plus Pact’ further reinforces this framework.

               (13)

               The Commission has assessed the Stability Programmes and the National Reform Programmes of the euro area Member States, taking into account the need to reinforce the overall economic governance of the euro area. It considers that strict adherence to budgetary targets, with a reinforcement in some euro area Member States, and further measures to strengthen fiscal rules and sustainability are required. Additional steps should also be taken to improve financial stability, growth-friendly tax reforms and consolidation measures, wage setting mechanisms, competition in service sectors, and the implementation of the Euro Plus Pact,

         HEREBY RECOMMENDS that the Member States whose currency is the euro take action within the period 2011-2012 to:

               1.

               Strictly adhere to the budgetary targets set out in their 2011 Stability Programmes as well as the Memoranda of Understanding in Member States receiving EU/IMF financial assistance and, where applicable, reinforce consolidation efforts in line with the opinion delivered by the Council. In particular, ensure adequate fiscal efforts with a view to correcting excessive deficits and approaching medium-term budgetary objectives. Use any fiscal windfalls to accelerate adjustment. This should also help to improve public debt dynamics.

               2.

               Ensure fiscal discipline at both national and subnational levels, notably by introducing or reinforcing sufficiently strong and binding fiscal frameworks.

               3.

               Continue to implement reforms to social security systems that ensure fiscal sustainability with due regard to the adequacy of pensions and social benefits, notably by aligning pension systems with the national demographic situation.

               4.

               Improve the functioning and stability of the financial system, following up immediately on the forthcoming EU-wide stress tests to ensure that the banking sector continues to strengthen its resilience to possible further losses or funding constraints and that non-viable financial institutions are able to restructure or exit the market without creating undue tensions on financial markets.

               5.

               Pursue further tax reforms which give priority to growth-friendly sources of taxation while preserving overall tax revenues, in particular by lowering taxes on labour to make work pay; when reducing public expenditure, protect growth-enhancing items such as spending on research and development, education and energy efficiency; where necessary adjust wage setting arrangements and indexation mechanisms, in consultation with social partners and in accordance with national practices, so as to ensure that wages are evolving in line with productivity, competitiveness and the employment situation.

               6.

               Introduce further reforms to enhance competition in service sectors, in particular by removing unjustified restrictions on professional services, retailing and network industries.

               7.

               Fully implement the commitments made in the Euro Plus Pact so as to enhance growth, competitiveness and employment within the area.

      Done at Brussels, 12 July 2011.

            For the Council

            The President

         J. VINCENT-ROSTOWSKI


Avis juridique important

|

52004SC0085

Recommendation for a Council opinion in accordance with the third paragraph of Article 5 of Council Regulation (EC) No 1466/97 of 7 July 1997 On the updated stability programme of the Netherlands, 2001-2007  /* SEC/2004/0085 final */

Recommendation for a COUNCIL OPINION in accordance with the third paragraph of Article 5 of Council Regulation (EC) No 1466/97 of 7 July 1997 On the updated stability programme of the Netherlands, 2001-2007(presented by the Commission)EXPLANATORY MEMORANDUMCouncil Regulation (EC) No. 1466/97, on the strengthening of the surveillance of budgetary positions and the surveillance and co-ordination of economic policies [1], stipulated that countries participating in the single currency were to submit stability programmes to the Council and the Commission by 1 March 1999. In accordance with Article 5 of this Regulation, the Council had to examine each stability programme based on the assessments prepared by the Commission and the Committee set up by Article 114 (formerly 109c) of the Treaty (from 1 January 1999, the Economic and Financial Committee). The Commission adopted a recommendation on each programme. On the basis of this recommendation and after having consulted the Economic and Financial Committee, the Council delivered an opinion, following its examination of the programme.[1]  OJ L 209, 2.8.1997. The documents referred to in this text can be found at the following web siteThe Netherlands' first stability programme covering the period 1999-2002 was submitted on 4 November 1998 and assessed by the Council on 1 December 1998 [2].[2]  OJ C 3, 6.1.1999The Netherlands submitted its most recent update of the stability programme, covering the period 2001-2007, on 14 October 2003. The Commission services have carried out a technical evaluation of this updated programme, taking into account the information provided in accordance with the Code of Conduct [3], the Autumn forecasts as well as subsequent evaluations, the commonly agreed methodology for the estimation of cyclically-adjusted balances, the recommendations in the Broad Economic Policy Guidelines and the principles laid down in the Communication of the Commission to the Council of 27 November 2002 on strengthening the co-ordination of budgetary policies [4]. This evaluation warrants the following assessment:[3]  Revised Opinion of the Economic and Financial Committee on the content and format of stability and converge programmes, document EFC/ECFIN/404/01 - REV 1 of 27.6.2001 endorsed by the Ecofin Council on 10.7.2001.[4]  COM(2002) 668 final, 27.11.2002.The update incorporates the 2004 budget. The budget was endorsed by Parliament with some limited modifications, which encompass the proposed budgetary policies of the government for its term of office until 2007. The programme is rich in information and complies with the requirements of the Code of Conduct on the content and format of the programmes. However, a few non-compulsory variables which are valuable inputs to compute cyclically adjusted balances using the common production function method were not included.For 2003 and 2004 the update of the stability programme uses macroeconomic projections by the CPB Netherlands Bureau of Economic Policy Analysis (CPB) which were officially released on 16 September 2003. For the period 2005-2007, the update uses the medium term economic projections released by the CPB on 16 May 2003. According to the update, economic activity is expected to remain sluggish in the near term. Real GDP growth is expected to pick up gradually to 1% in 2004, from zero in 2003, and to 2½% in 2005, 2006 and 2007.In recent years the general government balance deteriorated significantly, despite successive rounds of fiscal savings measures. To a large extent this deterioration reflects the impact of the sharp and prolonged economic downturn. The update expects a deterioration in the general government balance to a deficit of 2.3% of GDP in 2003, from 1.6% of GDP in 2002, despite substantial measures. This pattern mainly reflects the impact of the economic slowdown activity but the delayed impact of the tax cuts of the 2001 fiscal reform, and increases in tax-deductible pension premia and tax-deductible increases in mortgage interest payments play a role as well.For the 2004-2007 whole period the update contains a substantial multi-annual consolidation package consisting of net expenditure cuts, and tax revenue raising measures. The measures to a large extent rely on expenditure reductions while the package is frontloaded in 2004 and 2005. The net ex-ante combined impact on the general government balance is equivalent to EUR 14.8 billion (around 3% of GDP) in the period 2004-2007. However, the cumulative improvement in the actual deficit is less because of negative second round effects. Overall, the nominal deficit would gradually decrease to 0.6% of GDP in 2007.By contrast, in cyclically adjusted terms (calculated using the common production function method) a position close to balance is targeted to be reached earlier. According to the update, the cyclically adjusted balance would improve from a deficit of 1.3% of GDP in 2003 to 0.7 % of GDP in 2004. In the period 2005-2007, the cyclically adjusted deficit is projected to be at or below 0.5% of GDP. In this respect the update assumes that, in line with the Council's interpretation of the stability programmes of other countries, a cyclically adjusted deficit of no more than 0.5% of GDP qualifies as a position close to balance.As regards the budgetary strategy underlying the update, a key element is the use of expenditure ceilings defined in real terms, as recommended in the 2003 Broad Economic Policy Guidelines. Expenditure windfalls can no longer be automatically used for increased expenditure. Automatic stabilisers on the revenue side of the budget would be allowed to work freely as much as possible. However, an expected increase of the general government deficit that would imply a violation of the Stability and Growth Pact has to be countered by additional savings measures.The update expects the debt to GDP ratio to remain well below 60% of GDP, increasing from 52.4% of GDP in 2002 to 54.5% of GDP in 2004 - largely in line with the Commission Autumn forecast - before decreasing slowly to 52.2% of GDP in 2007.The budgetary projections appear to be optimistic and outdated in view of more recent information, which suggests a further worsening of the economic situation and budgetary position. According to the Commission Autumn forecast, and new forecasts by the CPB released on 4 December 2003, economic growth in 2003 is likely to be much lower than estimated in the update. The Commission Autumn 2003 forecast estimates real GDP to shrink by close to 1% in 2003, while the CPB puts -¾%. Downside risks are also attached to the growth projections for 2005-2007.The deficit forecasts for 2003 and 2004 in the update also seem too low, compared to the Commission Autumn 2003 forecast, according to which the deficit would reach 2.6% and 2.7% of GDP in 2003 and 2004 respectively, and decrease only slightly in 2005. Preliminary estimates for 2003 by the Ministry of Finance released on 14 January suggest that the deficit was 2.7% of GDP. Risks to the budgetary outlook for the period 2005-2007 appear skewed to the downside as well, in view of the likelihood of a worse budgetary starting point.Despite these risks to the nominal deficit projections, the implications for fiscal adjustment in terms of improvements in the cyclically adjusted balance are not equally negative. The cyclically adjusted balances presented in the update almost coincide with the estimates in the Commission Autumn forecast for the period up to 2005. In both 2003 and 2004 the adjustment in the cyclically adjusted deficit would be at least the required 0.5 percentage point of GDP. The budgetary projections in the update show a position close to balance in 2005 to 2007 (assumed in the update to be a cyclically adjusted deficit of no more than 0.5% of GDP), a position that would be maintained over the remainder of the forecast horizon up to 2007. This confirms that a significant structural budgetary adjustment is underway and would be maintained even in the case of a weaker-than-expected economic recovery.However, on unchanged policies and given normal macroeconomic fluctuations a sufficient safety margin not to exceed the 3% of GDP nominal deficit threshold is not provided for throughout the programme period. In the light of the considerations above, the risk of exceeding the threshold seems largest in 2004.On the basis of the current policies, the risk of budgetary imbalances emerging in the Netherlands in the medium to longer run cannot be ruled out. According to Commission calculations on the basis of the update, on unchanged policies the debt to GDP ratio is expected to increase above 60% once the full impact of ageing takes place. In order to maintain public finances on a sustainable footing, debt should be reduced at a sufficient pace in the period prior to the budgetary effects of ageing population taking hold, along with continuing to control the factors influencing the expenditure ratio.The update is broadly consistent with the 2003 Broad Economic Policy Guidelines, in particular those with budgetary implications, as regards pursuing budgetary adjustment towards a position close to balance, and containing expenditure over the cabinet period under ceilings in real terms.Based on this assessment, the Commission has adopted the attached recommendation for a Council Opinion on the Stability Programme update for the Netherlands and is forwarding it to the Council.Recommendation for a COUNCIL OPINION in accordance with the third paragraph of Article 5 of Council Regulation (EC) No 1466/97 of 7 July 1997 On the updated stability programme of the Netherlands, 2001-2007THE COUNCIL OF THE EUROPEAN UNION,Having regard to the Treaty establishing the European Community,Having regard to Council Regulation (EC) No 1466/97 of 7 July 1997 on the strengthening of the surveillance of budgetary positions and the surveillance and co-ordination of economic policies [5], and in particular Article 5(3) thereof,[5]  OJ L 209, 2.8.1997Having regard to the recommendation of the Commission, after consulting the Economic and Financial Committee,HAS DELIVERED THIS OPINION:On [10 February 2004] the Council examined the 2003 update of the stability programme of the Netherlands, which covers the period 2001 to 2007. The updated programme complies with the data requirements of the revised "code of conduct" on the content and format of stability and convergence programmes.The budgetary strategy underlying the update is based on keeping real expenditure below predetermined ceilings over the period 2004-2007, while at the same time pursuing significant savings measures. Measures are frontloaded in 2004 and 2005 and for a large part consists of expenditure cuts. In the strategy, expenditure windfalls can no longer be used for automatic expenditure increases. Automatic stabilisers on the revenue side of the budget should be allowed to work freely as much as possible, except that an increase of the deficit that would imply a violation of the Stability and Growth Pact has to be countered by additional savings measures.The update projects real GDP growth at 0% in 2003, from 0.2% in 2002. In 2004 growth is estimated to pick up to 1%, whereas it would average 2½% in 2005-2007. Employment growth is expected to be -½% in 2004 and to increase to slightly above 1% on average in 2005-2007. HICP inflation is forecast to remain stable at 1½% in 2004-2007. On the basis of currently available information, the macro-economic scenario underlying the programme seems optimistic, in particular as regards the growth projections for 2003 and 2004, which are considerably higher than those of the Commission in its Autumn 2003 forecast.The programme encompasses a substantial package of net savings, covering the period 2004-2007. However, in view of the sharp deceleration in economic activity the deficit is expected to rise in spite of the size of the measures taken. The programme targets a general government deficit of 2.3% of GDP in 2004, the same as the expected deficit in 2003 despite substantial measures aimed at limiting the deficit increase, in line with the Council recommendations on the previous stability programme update. For 2005, 2006 and 2007, the projections are for a nominal deficit of 1.6, 0.9 and 0.6% of GDP respectively. In cyclically-adjusted terms, based on Commission calculations according to the commonly agreed methodology, the update targets an improvement by around 0.6 percentage points in 2004 to a deficit of 0.7% of GDP.  The cyclically adjusted deficit is expected to fall further to 0.5% of GDP or slightly below in each of the years 2005 to 2007.The update expects the debt ratio to fall slightly to 54.5% of GDP in 2004, before falling to around 52% by 2007.However, on the basis of currently available information, the projections on the budget balance appear too optimistic judging from the Commission Autumn forecast. For 2003, this is confirmed by the release released of a preliminary estimate of the deficit for 2003 of 2.7% of GDP by the Ministry of Finance on 14 January 2004. Because of the worse starting point, a higher nominal deficit than forecast in the programme also seems likely in 2004 and possibly in subsequent years. Despite substantial savings measures, the budgetary stance in the programme does not seem to provide a sufficient safety margin against breaching the 3% of GDP deficit threshold under normal macroeconomic fluctuations throughout the programme horizon in view of the severity of the economic downturn. However, notwithstanding the downside risks to the nominal budgetary projections, the Commission Autumn forecast suggests that the planned improvement in the cyclically adjusted deficit, reaching a position close to balance from 2005 onwards, may still be achieved. Thus, the eventual achievement of medium-term position close to balance should be sufficiently established by the programme.For the period up to 2005, the update expects a somewhat lower debt ratio than the Commission Autumn forecast. On the basis of current policies, the risk of budgetary imbalances emerging in the future cannot be ruled out once the full impact of ageing takes place. Securing an adequate improvement in the primary surplus before ageing reaches its peak, together with the necessary measures to stem the long-term increase in expenditure, is essential to ensure that the public finances are kept on a sustainable footing.The economic policies as reflected in the updated programme are broadly consistent with the recommendations in the Broad Economic Policy Guidelines, specifically those with budgetary implications. This regards in particular the implementation of budgetary consolidation aimed at achieving and maintaining a budgetary position close to balance in the medium term. To this end the setting of expenditure ceilings in real terms has been crucial.


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		52012DC0325

			Recommendation for a COUNCIL RECOMMENDATION on Romania’s 2012 national reform programme and delivering a Council opinion on Romania’s convergence programme for 2012-2015 /* COM/2012/0325 final*/

			   	Recommendation for a
COUNCIL RECOMMENDATION
on Romania’s 2012 national reform
programme
and delivering a Council opinion on Romania’s convergence programme for
2012-2015
THE COUNCIL OF THE EUROPEAN UNION,
Having regard to the Treaty on the
Functioning of the European Union, and in particular Articles 121(2) and 148(4)
thereof,
Having regard to Council Regulation (EC) No
1466/97 of 7 July 1997 on the strengthening of the surveillance of budgetary
positions and the surveillance and coordination of economic policies[1], and in particular Article 5(2)
thereof,
Having regard to the recommendation of the
European Commission[2],
Having regard to the resolutions of the
European Parliament[3],
Having regard to the conclusions of the
European Council,
Having regard to the opinion of the
Employment Committee,
After consulting the Economic and Financial
Committee,
Whereas:
(1)       On 26 March 2010, the European Council agreed to the
European Commission’s proposal to launch a new strategy for jobs and growth,
Europe 2020, based on enhanced coordination of economic policies, which will
focus on the key areas where action is needed to boost Europe’s potential for
sustainable growth and competitiveness.
(2)       On 13 July 2010, the
Council adopted a recommendation on the broad guidelines for the economic
policies of the Member States and the Union (2010 to 2014) and, on 21 October
2010, adopted a decision on guidelines for the employment policies of the
Member States[4],
which together form the ‘integrated guidelines’. Member States were invited to
take the integrated guidelines into account in their national economic and
employment policies.
(3)       On 12 July 2011, the
Council adopted a recommendation on Romania’s national reform programme for 2011
and delivered a Council Opinion on Romania’s updated convergence programme
2011-2014.
(4)       On 23 November 2011, the
Commission adopted the second Annual Growth Survey, marking the start of the second
European semester of ex-ante and integrated policy coordination, which is
anchored in the Europe 2020 strategy.
(5)       On 2 March 2012, the
European Council endorsed the priorities for ensuring financial stability,
fiscal consolidation and action to foster growth. It underscored the need to pursue
differentiated, growth-friendly fiscal consolidation, to restore normal lending
conditions to the economy, to promote growth and competitiveness, to tackle
unemployment and the social consequences of the crisis, and to modernise public
administration.
(6)       On
2 March 2012, the European Council also invited the Member States participating
in the Euro Plus Pact to present their commitments in time for inclusion in
their stability or convergence programmes and their national reform programmes.
(7)       On 23 April 2012, Romania
submitted its 2012 national reform programme and, on 11 May 2012, its convergence
programme covering the period 2012-2015.
(8)       On 6 May 2009, the Council
adopted Decision 2009/459/EC[5]
to make available to Romania medium-term financial assistance for a period of
three years under the provisions of Article 143 of the Treaty. The
accompanying Memorandum of Understanding signed on 23 June 2009
and its successive supplements lay down the economic policy conditions on the
basis of which the financial assistance was disbursed. Decision 2009/459/EC
was amended on 16 March 2010 by Decision 2010/183/EU[6]. Following Romania’s successful
implementation of the programme, and given a partial adjustment of the current
account because of remaining structural weaknesses in Romania’s product and
labour markets which make the country sensitive to international price shocks,
on 12 May 2011 the Council adopted Decision 2011/288/EU[7] to make precautionary medium‑term
financial assistance available to Romania for a period of three years under
Article 143 of the Treaty. The accompanying Memorandum of Understanding was
signed on 29 June 2011 and its first supplement to it on 27 December 2011.
(9)       The second formal review
of the medium-term financial assistance programme that took place in late
April-early May 2012 established that Romania's implementation of the programme
remains on track. The cash fiscal deficit target for 2011 was met, while the
ESA[8] target would have been met had
there not been a sizeable one-off measure linked to court decisions obliging
the government to pay compensation to certain categories of employees. The 2012
budget remains on track to achieve a deficit below 3 % of GDP in ESA terms. The
Romanian banking sector has remained resilient, in spite of the on-going
deterioration in asset quality, which has continued weighing on banking sector
profitability. The programme conditionality in the financial sector was met,
albeit with some delays in certain cases. Progress in key structural reform
areas, such as energy and transport and EU funds absorption have been uneven.
(10)     After two years of decline,
real GDP of Romania grew in 2011 by 2½%. For 2012 growth is expected to
decelerate to 1.4 %. Domestic demand is forecast to be the major driver of
growth. Public investment, supported by improving EU funds absorption, is
expected to play a key role in 2012.
(11)     Based on the assessment of
the 2012 convergence programme pursuant to Council Regulation (EC) No 1466/97,
the Council is of the opinion that the macroeconomic scenario underpinning the
budgetary projections in the programme is plausible. The objective of the
budgetary strategy outlined in the programme is to reach a budget deficit below
3% of GDP in 2012, in line with the Council recommendations given to Romania under
the Excessive Deficit Procedure. Thereafter, it aims at achieving a medium-term
budgetary objective (MTO) defined as a deficit of 0.7% of GDP in structural
terms. The MTO adequately reflects the requirements of the Stability and Growth
Pact. Following the planned correction of the excessive deficit in 2012, the
deficit is expected to decrease further to 2.2% of GDP in 2013, to 1.2% of GDP
in 2014 and 0.9% of GDP in 2015. Based on the (recalculated) structural budget
balance,[9]
this implies an improvement in the deficit by 1.5% in 2012, 0.5% in 2013 and
0.7% in 2014, in line with the 0.5% of GDP benchmark of the Stability and
Growth Pact. The growth rate of government expenditure is in line with the
expenditure benchmark of the Stability and Growth Pact over the 2012-2015
period. The programme foresees the achievement of the MTO in 2014. The main
risks to the budgetary targets are the arrears of state owned enterprises, as
well as potential re-accumulation of arrears at local government level and in
the health sector. As regards public debt, it was below 34% of GDP by end 2011
thus remaining substantially below 60% of GDP.
(12)     Romania has made a number
of commitments under the Euro Plus Pact. These commitments, and the
implementation of the commitments presented in 2011, relate to fostering
competitiveness and employment, to making public finances more sustainable and
to reinforcing financial stability.
HEREBY RECOMMENDS that Romania
should take action within the period 2012-2013 to:
Implement the measures laid down in
Decision 2009/459/EC, as amended by Decision 2010/183/EU, together with
the measures laid down in Decision 2011/288/EU and further specified in the
Memorandum of Understanding of 23 June 2009 and its subsequent supplements, and
in the Memorandum of Understanding of 29 June 2011 and its subsequent
supplements.
Done at Brussels,
                                                                       For
the Council
                                                                       The
President
[1]               OJ L 209, 02.08.1997, p. 1
[2]               COM(2012)325 final
[3]               P7_TA(2012)0048 and P7_TA(2012)0047
[4]               Council Decision 2012/238/EU of 26 April 2012
[5]               OJ L 150, 13.6.2009, p. 8.
[6]               OJ L 83, 30.3.2010, p. 19.
[7]               OJ L 132, 19.5.2011, p. 15.
[8]               European System of Accounts
[9]               Cyclically adjusted balance net of one-off and
temporary measures, recalculated by the Commission services on the basis of the information provided in the programme, using
the commonly agreed methodology.


title: Recommendation of the European Central Bank of 14 September 2012 to the Council of the European Union on the external auditors of the Central Bank of Ireland (ECB/2012/20)

text:
               22.9.2012

               EN

               Official Journal of the European Union

               C 286/1

         RECOMMENDATION OF THE EUROPEAN CENTRAL BANK
   of 14 September 2012
   to the Council of the European Union on the external auditors of the Central Bank of Ireland
   (ECB/2012/20)
   2012/C 286/01
   THE GOVERNING COUNCIL OF THE EUROPEAN CENTRAL BANK,
   Having regard to the Statute of the European System of Central Banks and of the European Central Bank, and in particular Article 27.1 thereof,
   Whereas:

               (1)

               The accounts of the European Central Bank (ECB) and national central banks are audited by independent external auditors recommended by the ECB’s Governing Council and approved by the Council of the European Union.

               (2)

               The mandate of the Central Bank of Ireland’s current external auditors ended after the audit for the financial year 2011. It is therefore necessary to appoint external auditors from the financial year 2012.

               (3)

               The Central Bank of Ireland has selected RSM Farrell Grant Sparks as its external auditors for the financial years 2012 to 2016,

         HAS ADOPTED THIS RECOMMENDATION:
   It is recommended that RSM Farrell Grant Sparks should be appointed as the external auditors of the Central Bank of Ireland for the financial years 2012 to 2016.

      Done at Frankfurt am Main, 14 September 2012.

            The President of the ECB

         Mario DRAGHI


title: Recommendation No S2 of 22 October 2013 concerning the entitlement to benefits in kind for insured persons and members of their family during a stay in a third country under a bilateral convention between the competent Member State and the third country  Text of relevance to the EEA and to the EC/Switzerland Agreement

text:
               18.2.2014

               EN

               Official Journal of the European Union

               C 46/8

         RECOMMENDATION No S2
   of 22 October 2013
   concerning the entitlement to benefits in kind for insured persons and members of their family during a stay in a third country under a bilateral convention between the competent Member State and the third country
   (Text of relevance to the EEA and to the EC/Switzerland Agreement)
   (2014/C 46/09)
   THE ADMINISTRATIVE COMMISSION FOR THE COORDINATION OF SOCIAL SECURITY SYSTEMS,
   Having regard to Article 72(a) of Regulation (EC) No 883/2004 of the European Parliament and of the Council of 29 April 2004 on the coordination of social security systems (1), under which the Administrative Commission is responsible for dealing with all administrative questions or questions of interpretation arising from the provisions of Regulation (EC) No 883/2004 and Regulation (EC) No 987/2009 (2),
   Having regard to Article 72(c) of Regulation (EC) No 883/2004, under which it shall foster and develop cooperation between Member States and their institutions in social security matters,
   Acting in accordance with the conditions laid down in Article 71(2) of Regulation (EC) No 883/2004,
   Whereas:

               (1)

               The particular importance of the general principle of equal treatment for workers who do not reside in the Member State of their employment, including frontier workers, has been reiterated in the eighth recital and in Article 4 of Regulation (EC) No 883/2004.

               (2)

               Article 4 of Regulation (EC) No 883/2004 prohibits discrimination of persons to whom this Regulation applies.

               (3)

               The Court of Justice has also ruled that if the application of a provision of Union law is liable to be impeded by a measure adopted pursuant to the implementation of a bilateral convention, even where the convention falls outside the field of application of the Treaty, every Member State is under a duty to facilitate application of that provision (3).

               (4)

               Even if a convention concluded between a single Member State and one or more third countries does not come within the concept of ‘legislation’ within the meaning of Article 1(l) of Regulation (EC) No 883/2004, this cannot affect the obligation of every Member State to comply with the principle of equal treatment laid down in Article 45 of the Treaty (4).

               (5)

               For this reason, it should be made clear that bilateral conventions on social security between a Member State and a third country must be interpreted to the effect that the bilateral conventions must be applied in such a way as to not deprive a person and the members of his/her family (Article 1(i) of Regulation (EC) No 883/2004) from the rights attached to the exercise of the freedom of movement within the European Union as laid down in the Treaty.

               (6)

               The freedom of movement cannot be fully effective if a person to whom the legislation of a Member State other than his/her State of residence applies were not granted the same treatment in law as persons residing in that Member State who find themselves in the same situation.

               (7)

               The provisions in Title III, Chapter 1, of Regulation (EC) No 883/2004 contain conflict rules which determine under which conditions an insured person and the members of his/her family are entitled to sickness benefits in kind on behalf of the competent institution, while residing or staying in another Member State.

               (8)

               The intention of Articles 17 and 24 to 26 of Regulation (EC) No 883/2004 is to ensure that the grant of sickness benefits in kind should not be conditional on the residence of the insured person in the competent Member State in order not to deter migrant workers from exercising their right to free movement (5).

               (9)

               This also applies to family members as defined in Article 1(i) of Regulation (EC) No 883/2004 who shall receive in the Member State of residence sickness benefits in kind provided, on behalf of the competent institution, by the institution of the place of residence on the basis of Articles 17 or 24 to 26 of Regulation (EC) No 883/2004.

               (10)

               The principle of equal treatment should also apply in principle in cases where the competent Member State has concluded a bilateral convention with a third country in which provisions on sickness benefits in kind which become medically necessary in a third country are included, and provided that the third country is prepared to cooperate in individual cases,

         HEREBY RECOMMENDS:

               1.

               A Member State which has concluded a bilateral convention on social security with a third country in which provisions on sickness benefits in kind are included shall apply these provisions to persons to whom the legislation of this Member State applies, as well as to members of their family, who reside in another Member State and who are entitled to receive benefits in kind on the basis of Articles 17 or 24 to 26 of Regulation (EC) No 883/2004, in the situation where sickness benefits in kind become medically necessary during a period of stay in that third country.

               2.

               This Recommendation shall be published in the Official Journal of the European Union. It shall apply from the first day of the second month after its publication.

            The Chair of the Administrative Commission

         Mariana ZIUKIENE

      (1)  OJ L 166, 30.4.2004, p. 1 (corrigendum OJ L 200, 7.6.2004, p. 1).

      (2)  OJ L 284, 30.10.2009, p. 1.

      (3)  Case C-55/00 Gottardo [2002] ECR I-413, paragraph 31 and Case 235/87 Matteucci [1988] ECR 5589, paragraph 19.

      (4)  Case C-55/00 Gottardo [2002] ECR I-413, paragraph 35 and Case C-23/92 Grana-Novoa [1993] ECR I-4505.

      (5)  Case C-286/03 Silvia Hosse [2006] ECR I-01771, paragraph 54.


Avis juridique important

|

32001H0928

Commission Recommendation of 20 December 2001 on the protection of the public against exposure to radon in drinking water supplies (notified under document number C(2001) 4580)

Official Journal L 344 , 28/12/2001 P. 0085 - 0088

Commission Recommendationof 20 December 2001on the protection of the public against exposure to radon in drinking water supplies(notified under document number C(2001) 4580)(2001/928/Euratom)THE COMMISSION OF THE EUROPEAN COMMUNITIES,Having regard to the Treaty establishing the European Atomic Energy Community, and in particular Article 30, the second paragraph of Article 33, the first paragraph of Article 38, and the second indent of Article 124 thereof,Having regard to the opinion of the Group of Experts appointed by the Scientific and Technical Committee pursuant to Article 31 of the Treaty,Whereas:(1) Council Directive 96/29/Euratom of 13 May 1996 laying down basic safety standards for the protection of the health of workers and the general public against the dangers arising from ionising radiation(1) lays down a framework for controlling exposures to natural radiation sources arising from work activities. Title VII of the Directive applies to work activities within which the presence of natural radiation sources leads to a significant increase in the exposure of workers or of members of the public. Member States are required to identify work activities which may be of concern.(2) In view of the large geographical variability in the natural occurrence of radon and in the extent to which the population and water supplies are affected, a flexible approach is needed to allow Member States to apply the concept of optimisation, while ensuring protection of the most highly exposed part of the population. Such an approach is in accordance with Article 6(3)(a) of Directive 96/29/Euratom.(3) The Group of Experts set up under Article 31 of the Euratom Treaty has provided technical guidance(2) for the implementation of Title VII of Directive 96/29/Euratom(3). The guidance includes the protection of workers to inhaled radon in establishments where significant amounts of radon may be released from water into indoor air.(4) Commission Recommendation 90/143/Euratom of 21 February 1990 on the protection of the public against indoor exposure to radon(4) introduces reference and design levels for indoor radon. The reference level for consideration of remedial action is 400 Bq/m3 and the design level for future constructions is 200 Bq/m3.(5) Surveys in Member States have shown elevated concentrations of radon in some ground waters, particularly in regions with crystalline rocks. There are circumstances under which radon concentrations in drinking water are radiologically significant as they expose the population to enhanced doses and should not be disregarded from the radiation-protection point of view. High concentrations are often related to individual drilled wells, but sometimes also to waterworks utilising rock or soil aquifers.(6) In many Member States there is increasing awareness of the significance of exposure of the population to radon in drinking water. Several countries have already or are drawing up dose-control policies. In many cases the control policies are drawn up in accordance with the protection principles established by the Council Directives 96/29/Euratom and 98/83/EC of 3 November 1998 on the quality of water intended for human consumption(5).(7) Radon is a naturally occurring radioactive noble gas, the most significant isotope of which is radon-222 with a half life of 3,82 days. This isotope is a member of the uranium-238 decay series and its presence in the environment is associated mainly with the trace amounts of its immediate parent, radium-226, in rocks and soil. Because radon is an inert gas, it can move rather freely through porous media such as soil or fragmented rock. Where the pores are saturated with water, as in soil and rock under the water table, radon is dissolved into the water and is then transported by it. Water-saturated soil with a porosity of 20 % and a radium concentration of 40 Bq/kg, which is the world-wide average in the earth's crust, causes at equilibrium a radon concentration in ground water of the order of 50 Bq/l.(8) Surveys in Member States have shown that radon concentrations in surface waters are very low, usually well below 1 Bq/l. Concentrations in ground water vary from 1 to 50 Bq/l for rock aquifers in sedimentary rocks, to 10 to 300 Bq/l for wells dug in soil, and to 100 Bq/l to 50000 Bq/l in crystalline rocks. The highest concentrations are usually associated with high uranium concentrations in the bedrock. A characteristic of radon concentrations in rock aquifers are their variability; within a region with fairly uniform rock types some wells exhibit concentrations far above the average for that region. Significant seasonal variations in concentrations have also been observed.(9) Radon in domestic water supplies causes human exposure through ingestion and inhalation pathways. Radon can be ingested by direct consumption of tap or fresh bottled water. Radon is released from tap water into indoor air which causes exposure to radon by inhalation.(10) In its report of 1993, the United Nations Scientific Committee on the Effects of Atomic Radiation (UNSCEAR)(6) estimated that the committed effective dose from ingestion of radon in water is 10-8 Sv/Bq for an adult and somewhat higher for a child and an infant. In 1998, the National Research Council, a committee in the United States, presented a conversion factor of 0.35.10-8 Sv/Bq(7). The committee did not find sufficient scientific evidence to introduce separate dose estimations for different age groups. In addition to the conversion factor, the ingestion dose depends also on the annual consumption of water. Estimates on the annual committed effective dose absorbed by an adult by the ingestion of water containing 1000 Bq/l vary between 0,2 mSv and 1,8 mSv, depending on the annual water consumption and the range of conversion factors used.(11) The increase in indoor radon concentration caused by tap water depends on various parameters such as the total consumption of water in the house, the volume of the house and the ventilation rate. Both the UNSCEAR and the National Research Council estimate that 1000 Bq/l of radon in tap water will on the average increase the indoor air radon concentration by 100 Bq/m3.(12) Radon in drinking water is controllable in the physical and engineering sense; effective methods for removing radon from drinking water have been developed(8) and are commercially available. Accordingly, an appropriate system needs to be established for reducing significant exposures. An important part of the system is the adoption of reference levels for consideration of remedial or preventive action.(13) The methods and equipment used for removing radon and long-lived radon decay products from water do not significantly differ in techniques or in costs between an existing water supply and a new supply planned for future use. Consequently, the same criteria, including the reference levels, may be used for remedial action on the existing water supplies and for setting preventive requirements for new water supplies.(14) For an individual water supply, whereby no water is supplied as part of a commercial or public activity, the exposure caused by radon in water is a phenomenon fairly similar to that of radon in dwellings. Accordingly, similar radiological protection criteria should be applied. Considering both the ingestion and inhalation pathways, the annual effective dose caused by water containing 1000 Bq/l radon is, according to current knowledge, very comparable to that caused by an indoor radon concentration of 200 Bq/m3, the design level established in Recommendation 90/143/Euratom.(15) Where water is supplied as part of a commercial or public activity, such as through a waterworks, the consumer does not have the same opportunity to control the received dose as an owner of an individual supply. It follows that the consumer must be confident that the water does not pose any risk to human health. In addition, remedial action taken on that water affects a large number of people, which makes the action more cost-effective at lower radon concentrations than is the case with an individual supply. Consequently, it is justified to adopt a more stringent control policy, including a lower reference level, for water supplied as part of a commercial or public activity than for an individual supply. Small amounts of radon in water are ubiquitous and therefore no remedial action should be required if the concentration is less than 100 Bq/l. National surveys might show that a higher reference level needs to be adopted for implementing a practical radon programme. However, it is unlikely that public or commercial distribution water with a radon concentration exceeding 1000 Bq/l could be considered justifiable from the radiation protection point of view.(16) The radon concentration of water at the point of delivery is unlikely to be greater than that at the source, as in the case of a waterworks. Usually a measurement at the source is sufficient to demonstrate compliance with the reference concentration and no separate measurements are needed at the various points of use. However, the radioactive decay and possible aeration of radon during delivery may need to be taken into account, for example, in assessing the doses.(17) Directive 98/83/EC requires the Member States to monitor the concentrations of natural radionuclides in drinking water, but in addition to radon, radon decay products are also excluded from the scope of the Directive. There are circumstances under which polonium-210 and lead-210 (long-lived decay products of radon) in drinking water pose a comparable or a higher radiation risk than some natural radionuclides monitored in accordance with the Directive. Accordingly, polonium-210 and lead-210 should not be disregarded in monitoring and in taking action to reduce exposures caused by natural radionuclides in drinking water. Reference concentrations for polonium-210 and lead-210 should be established and they should be monitored according to the principles set for natural radionuclides by the Directive. The indicative dose of 0,1 mSv and the principles of dose calculation established in the Directive should be used for deriving the reference concentrations.(18) High radon concentrations indicate a potential presence of other radionuclides of the uranium decay series in the water, although the correlation is not always unambiguous. When remedial action is taken to reduce radon concentration, the presence of other natural radionuclides should be screened and, where appropriate, be analysed in more detail so that a suitable technique can be chosen to remove all the radiologically significant natural radionuclides from the water at the same time, in a cost effective way.(19) Specific guidance should be made available to the waterworks and to the owners of public water supplies on the different methods available for removing radon and long-lived radon decay products from water. The guidance should include, in particular, instructions on the handling and disposal of accrued radioactive waste and on the ways of minimising possible exposure due to radon released from a removal device or by the increase in external gamma radiation in the vicinity of a removal device.(20) Simple metrological procedures should be established to ensure that measurements of radon and radon decay products in water yield data of the appropriate quality and reliability.(21) Owing to the special characteristics of the problem, adequate public information is an important element both in improving the controllability of exposure and in securing a positive public response.(22) The purpose of this Recommendation is to provide guidance to the Member States for setting controls on exposures caused by radon and radon decay products in drinking water,HEREBY RECOMMENDS:1. This Recommendation concerns the radiological quality of drinking water supplies regarding radon and long-lived radon decay products.2. An appropriate system should be established for reducing exposures to radon and long-lived radon decay products in domestic drinking water supplies. Within this system adequate public information and response to public concern deserve particular attention. Under the system attention should concentrate on the highest exposures and on those areas where action is most likely to be effective.3. For the purpose of this Recommendation, "drinking water" shall mean:(a) all water either in its original state or after treatment, intended for drinking, cooking, food preparation or other domestic purposes, regardless of its origin and whether it is supplied from a distribution network, from a tanker, or in bottles or containers,(b) all water used in any food-production undertaking for the manufacture, processing, preservation or marketing of products or substances intended for human consumption unless the competent national authorities are satisfied that the quality of the water cannot affect the wholesomeness of the foodstuff in its finished form.Natural mineral waters covered by Council Directive 80/777/EEC(9) and waters which are medical products according to Council Directive 65/65/EEC(10) are excluded from the scope of this Recommendation, since special rules for those types of water have been established.4. Representative surveys should be undertaken to determine the scale and nature of exposures caused by radon and long-lived radon decay products in domestic drinking water supplies originating from different types of ground water sources and wells in different geological areas unless this information is already available. The surveys should be designed in such a way that underlying parameters, and especially the geology and hydrology of the area, radioactivity of rock or soil, and well type, can be identified and used later for directing further action on the highest exposures. The surveys should cover, in particular:(a) drilled wells, especially those in crystalline rock areas,(b) waterworks using rock or soil aquifers.5. For water supplied as part of a commercial or public activity, the following action should be taken:(a) above a concentration of 100 Bq/l, Member States should set a reference level for radon to be used for consideration whether remedial action is needed to protect human health. A level higher than 100 Bq/l may be adopted if national surveys show that this is necessary for implementing a practical radon programme. For concentrations in excess of 1000 Bq/l, remedial action is deemed to be justified on radiological protection grounds;(b) measurements of radon concentration should be required if there is a specific reason to suspect, on the basis of the results of representative surveys or other reliable information, that the reference level might be exceeded;(c) where significant concentrations of polonium-210 and lead-210 are suspected, on the basis of the results of representative surveys or other reliable information, monitoring of these nuclides should be arranged in conjunction with the monitoring of other natural radionuclides required by Directive 98/83/EC;(d) above a reference concentration of 0,1 Bq/l for polonium-210 and 0,2 Bq/l for lead-210, consideration should be given to whether remedial action is needed to protect human health.6. For an individual water supply, from which no water is supplied as part of any commercial or public activity, the following action should be taken:(a) a level of 1000 Bq/l should be used for consideration of remedial action;(b) the urgency of the remedial action should be commensurate with the extent to which the reference concentration is exceeded;(c) where remedial action is considered necessary because of radon, the levels of other natural radionuclides should be screened and where appropriate as a result of the screening, other natural radionuclides should be analysed and removed from the drinking water with the same remedial action;(d) where remedial action is considered necessary, the consumers concerned should be informed of the radon levels of the water and of the remedies available to reduce such levels.7. Where measurements indicate that the radon in tap water contributes significantly to exceeding the threshold set for indoor radon, remedial action on this source should be considered.8. Drinking water distributed in public premises such as residential homes, schools, and hospitals should comply with the principles of point 5.9. Measurements should be made with appropriate methods and equipment which have undergone approved calibration and quality assurance programmes.10. Member States should provide guidance on different methods available for removing radon and long-lived radon decay products from water. Member States should provide instructions on the handling and disposal of radioactive waste generated by the removal process and on ways to minimise possible exposure caused by radon released from a removal device or by the increase in external gamma radiation in the vicinity of a removal device.11. The exposure of workers to inhaled radon in establishments where significant amounts of radon may be released from water into indoor air, in particular in waterworks, spas and swimming pools, should be controlled according to Title VII of the Directive 96/29/Euratom and according to the Recommendations, "Radiation Protection 88", made in 1997 for the implementation of that Title by the Group of Experts established under Article 31 of the Euratom Treaty.12. Member States should consider to what extent the intentional use of radon-bearing water for its prospective therapeutic effects is justified by its economic, social or other benefits when set against the health detriment it may cause.This Recommendation is addressed to the Member States.Done at Brussels, 20 December 2001.For the CommissionMargot WallströmMember of the Commission(1) OJ L 159, 29.6.1996, p. 1.(2) Radiation Protection 88. Recommendations for the implementation of Title VII of the European Basic Safety Standards Directive (BSS) concerning the significant increase in exposure due to natural radiation sources. European Commission, Luxembourg, 1997.(3) OJ L 159, 29.6.1996, p. 1.(4) OJ L 80, 27.3.1990, p. 26.(5) OJ L 330, 5.12.1998, p. 32.(6) UNSCEAR 1993 report. Sources and effects of ionising radiation. United Nations Scientific Committee on the Effects of Atomic Radiation, New York, 1993.(7) Risk Assessment of Radon in Drinking Water. Committee on Risk Assessment of Exposure to Radon in Drinking Water, Board on Radiation Effects Research, Commission of Life Sciences, NRC (National Research Council). National Academy Press, Washington DC, 1999.(8) The Commission has funded and is funding several research projects on the risk of exposure to radon. The TENEWA project (Treatment Techniques for Removing Natural Radionuclides from Drinking Water) carried out under the CEC contract No FI4PCT960054 has produced a significant amount of information on the removal techniques, including information on the possible radiological hazards caused by removal devices.(9) OJ L 229, 30.8.1980, p. 1.(10) OJ Special Edition 1965-1966, p. 20.


title: Council Recommendation of 21 June 2013 with a view to bringing an end to the situation of an excessive government deficit in Malta

text:
               26.6.2013

               EN

               Official Journal of the European Union

               C 180/1

         COUNCIL RECOMMENDATION
   of 21 June 2013
   with a view to bringing an end to the situation of an excessive government deficit in Malta
   2013/C 180/01
   THE COUNCIL OF THE EUROPEAN UNION,
   Having regard to the Treaty on the Functioning of the European Union, and in particular Article 126(7) thereof,
   Having regard to the recommendation from the European Commission,
   Whereas:

               (1)

               According to Article 126 of the Treaty, Member States are to avoid excessive government deficits.

               (2)

               The Stability and Growth Pact is based on the objective of sound government finances as a means of strengthening the conditions for price stability and for strong sustainable growth conducive to employment creation.

               (3)

               On 21 June 2013, the Council decided, in accordance with Article 126(6) of the Treaty, that an excessive deficit existed in Malta.

               (4)

               In accordance with Article 126(7) of the Treaty and Article 3 of Council Regulation (EC) No 1467/97 on speeding up and clarifying the implementation of the excessive deficit procedure (1), the Council is required to address recommendations to the Member State concerned with a view to bringing the situation of an excessive deficit to an end within a given period. The Recommendation has to establish a maximum deadline of 6 months for effective action to be taken by the Member State concerned to correct the excessive deficit. Furthermore, in a recommendation to correct an excessive deficit the Council requests the achievement of annual budgetary targets which, on the basis of the forecast underpinning the recommendation, are consistent with a minimum annual improvement in the structural balance, that is, the cyclically-adjusted balance excluding one-off and other temporary measures, of at least 0,5 % of GDP as a benchmark.

               (5)

               In accordance with Article 2 of Regulation (EC) No 1467/97, the budgetary target recommended for the final year of the correction period must ensure that the required reduction in the differential between the debt-to-GDP level and the 60 %-of-GDP Treaty reference value will occur over the two years following the correction of the excessive deficit, based on the Commission forecast.

               (6)

               The Commission 2013 spring forecast projects that the deficit will continue to be above the reference value in 2013 and 2014, respectively at 3,7 % and 3,6 % of GDP. Those budgetary projections are based on current policies, thus incorporating the 2013 budget that was endorsed by Parliament in April 2013, which includes expansionary measures on both the revenue and expenditure side as well as the already planned equity injection into Air Malta (0,6 % of GDP), with a net deficit-increasing impact of 0,3 % of GDP. The expansionary measures are only partially compensated by increases in excise duties, the collection of tax arrears as well as the expenditure savings and higher social contributions stemming from the 2006 pension reform. In addition, the contribution of net deficit-reducing one-offs, as identified by the Commission, to the consolidation effort would fall sharply after 2012. Due to the expected continued primary deficits in 2013 and 2014, the general government debt, according to the Commission 2013 spring forecast, is projected to rise further, to 73,9 % of GDP in 2013 and to 74,9 % of GDP in 2014. In 2015 and 2016, the general government deficit is projected to remain above the 3 % of GDP reference value, and the debt-to-GDP ratio would increase to 75,6 % of GDP by 2016.

               (7)

               According to Regulation (EC) No 1467/97, the correction of the excessive deficit should be completed in the year following its identification, unless there are special circumstances. A correction of the excessive deficit by 2014 is therefore justified. In particular, a credible and sustainable adjustment path would require Malta to reach a headline general government target of 3,4 % of GDP for 2013 and 2,7 % of GDP in 2014, which is consistent with an annual improvement of the structural balance of 0,7 % of GDP in 2013 and 0,7 % of GDP in 2014. The 2014 target ensures that the required reduction in the differential between the debt-to-GDP level and the 60 %-of-GDP Treaty reference value will occur over the two years following the correction of the excessive deficit procedure. To reach the above mentioned structural targets, Malta would need to adopt additional consolidation measures of around 0,4 % of GDP in 2013, on top of the measures already included in the baseline scenario, and around 0,75 % of GDP in 2014. These targets take into account the need to compensate for the negative second-round effects of fiscal consolidation on public finances, through its impact on GDP growth. The baseline scenario on which this adjustment path is built incorporates the Commission 2013 spring forecast and extends it up to 2016 relying on standard assumptions about the closure of the output gap and the sensitivity of the budget to the cycle; it does not include, however, the additional capital injection into Air Malta that is planned in 2015 according to the 2013 stability programme. It is thus assumed that the capital injection will not take place or be offset by measures in the opposite direction.

               (8)

               Malta’s fiscal framework is quite flexible, and its non-binding nature and the short horizon of fiscal planning are not supportive of a sound fiscal position. Council Directive 2011/85/EU of 8 November 2011 on requirements for budgetary frameworks of the Member States (2) has not yet been transposed. Moreover, in accordance with Article 5 of Regulation (EU) No 473/2013 of the European Parliament and of the Council of 21 May 2013 on common provisions for monitoring and assessing draft budgetary plans and ensuring the correction of excessive deficit of the Member States in the euro area (3), Malta should put in place independent bodies for monitoring compliance with fiscal rules. While the stability programme states the intention of the government to set up a fiscal council, no concrete plans are laid out.

               (9)

               In accordance with Article 9(1) of Regulation (EU) No 473/2013, Malta should present to the Commission and to the Council an economic partnership programme, simultaneously with the report to be submitted in accordance with Article 3(4a) of Regulation (EC) No 1467/97.

               (10)

               In the view of the Council, budgetary consolidation measures should secure a lasting improvement in the general government balance, while being geared towards enhancing the quality of the public finances and reinforcing the growth potential of the economy,

         HAS ADOPTED THIS RECOMMENDATION:

               (1)

               Malta should put an end to the present excessive deficit situation by 2014.

               (2)

               Specifically, Malta should:

                           (a)

                           reach a headline general government deficit target of 3,4 % of GDP in 2013 and 2,7% of GDP in 2014, which is consistent with an annual improvement of the structural balance of 0,7 % of GDP in 2013, and 0,7 % of GDP in 2014; this adjustment path would allow the headline government deficit to be brought below the 3 % of GDP reference value by 2014 while at the same time ensuring that the government gross debt ratio approaches the 60 %-of-GDP reference value at a satisfactory pace;

                           (b)

                           specify and rigorously implement the measures necessary to achieve the correction of the excessive deficit by 2014, and use all windfall gains for deficit reduction.

               (3)

               The Council establishes the deadline of 1 October 2013 for Malta to take effective action and, in accordance with Article 3(4a) of Regulation (EC) No 1467/97, to report in detail the consolidation strategy that is envisaged to achieve the targets.
               Following the correction of the excessive deficit, Malta is invited to continue making progress at an appropriate pace towards its medium-term objective of a balanced budget in strcutral terms, including by meeting the expenditure benchmark. To limit risks to budgetary execution, the Council invites Malta to strengthen the effectiveness of its budgetary framework and improve the monitoring of budget execution throughout the year. In particular, Malta is invited to put in place a more binding, rule-based multiannual fiscal framework. In addition, the role of independent bodies monitoring fiscal policy should be strengthend, in accordance with Article 5 of Regulation (EU) No 473/2013.
               Finally, to ensure the success of the fiscal consolidation strategy, the Maltese authorities are invited to back the fiscal consolidation with comprehensive structural reforms, in line with the Council recommendations addressed to Malta in the context of the European Semester and in particular those related to the preventive arm of the Macroeconomic Imbalances Procedure (4).
               This Recommendation is addressed to Malta.

      Done at Luxembourg, 21 June 2013.

            For the Council

            The President

         M. NOONAN

      (1)  OJ L 209, 2.8.1997, p. 6.

      (2)  OJ L 306, 23.11.2011, p. 41.

      (3)  OJ L 140, 27.5.2013, p. 11.

      (4)  All documents related to the excessive deficit procedure of Malta can be found at: http://ec.europa.eu/economy_finance/economic_governance/sgp/deficit/countries/malta_en.htm