European Commission : Remarks by Vice-President Dombrovskis at the ECOFIN Council press conference

Thank you, Edward, for your expert stewardship of your first ECOFIN Council meeting under the Maltese Presidency.

The Maltese Presidency takes place in challenging times against the backdrop of increasing uncertainty. We are ready to support the Presidency and welcome its work programme. We are ready to work very closely to ensure successful implementation of this ambitious programme.

Today, Finance Ministers agreed on the main documents of the 2017 European Semester. We see that the ministers broadly share the Commission's analysis of the economic situation and policy challenges in the EU. Agreement was reached on the Annual Growth Survey, Alert Mechanism Report and Euro Area Recommendations.

The EU economy is recovering, but against a backdrop of increasing uncertainty. Nevertheless, we expect all EU Member States' economies to grow this year.

We welcome Member States' support to the three economic policy priorities set out in the Annual Growth Survey, namely:

• strengthening investment;
• implementing structural reforms to strengthen our competitiveness; and
• responsible fiscal policies.

This year's European Semester put more emphasis on inclusive growth and on economic development - which works for us all.

As regards the Euro Area Member States, the ECOFIN Council also adopted guidance under the Euro Area Recommendations. They imply that Member States should pursue differentiated fiscal policy, meaning that those Member States in the Excessive Deficit Procedure should continue their convergence towards their Medium-Term Budgetary Objectives (MTOs) and ensure compliance with the Stability and Growth Pact. At the same time, those Member States that are over-performing on their MTOs could use their fiscal space to stimulate investment.

The next step for Member States is to translate this guidance into national reform and stability programmes by mid-April.

What is important is that there is increased national ownership and implementation of reforms.

We will soon publish our Country Reports, which are our analysis of the Member States' economic and social challenges.

These reports will include a novelty: an assessment of implementation of country-specific recommendations (CSRs) in each country.

In this context, we support the intention of the Maltese Presidency to prepare a thematic discussion on the implementation of CSRs at the ECOFIN meeting in March.

We also discussed the state-of-play in the BASEL negotiations.

On a positive note, we are moving closer to an agreement. The main outstanding issue is the so-called 'output floor' or capital floor. If set too high, an output floor risks causing a significant increase in capital requirements in European banks. It would also reduce risk sensitivity of our government frameworks and that would be contrary to Ministers' guidance, which was given last year.

We want to reach an agreement that works for everyone; one which makes European banks stronger, without hampering the funding of the European economy.

Given the fact that this agreement will shape aspects of banking regulation for years to come, it is important to concentrate on getting the agreement right.

We are now counting on the new US Administration to explain their priorities so that we can we make progress.

Today, we also discussed the Commission's proposal on a VAT 'reverse charge' mechanism.

If adopted, it would allow Member States to temporarily derogate from the current VAT system and use the reverse charge mechanism which, according to several Member States, would help them fight VAT fraud and reduce the VAT gap.

We see that there are different positions and opinions in the ECOFIN Council and we are ready for intense discussions on this file.

As the Minister just outlined, Professor Monti presented the Report of the High-Level Group on Own Resources on the future financing of the European Union. The Commission will take its conclusions and discussions into account in the preparatory work for the next Multiannual Financial Framework.

Thank you.