ECONOMIC POLICY: COUNCIL GO-AHEAD FOR FOUR CONVERGENCE AND STABILITY PROGRAMMES.

Summary:Recommendations concerning stability or convergence programmes worked out by Italy, Portugal, Sweden and the UK were adopted by the EU Council of Ministers on February 8 in Brussels. In the case of Italy, the Council of Ministers decided against accepting the European Commission's proposal (made on February 3) to ask the Italians to update their stability programme. Yves-Thibault de Silguy, European Commissioner for Economic and Monetary Affairs, recalled that the Italian Treasury Minister, Carlo Azeglio Ciampi, has undertaken to forward the economic and financial programme document the Italy authorities are due to adopt in May.

Stability programmes.

The Recommendation adopted for Italy notes that the country will take the opportunity in May, during the adoption of its economic and financial programme, to review the stability programme's economic forecasts. The Council of Ministers believes the assumptions in the programme are "overly optimistic" and this applies in particular to the economic growth forecasts. The aim of achieving a government deficit equal to 1% of GDP by 2001 is said to be consistent with the provisions in the Stability and Growth Pact (which assumes a balanced budget by 2002). The Recommendation nonetheless recommends a greater reduction in the deficit so as to promote the pace at which the level of debt is being scaled down. This is supposed to reach 107% of GDP by 2001.

For Portugal, the Council of Ministers believes the stability programme targets will help extend the budgetary consolidation process the country embarked upon so as to join the single currency. Portugal's membership of the first-wave of Euro participants could, however, create risks for the targets reflected in the programme, according to the Recommendation. Hence the Government in Lisbon is being...