Commissioner says EMU on course

Yves-Thibault de Silguy, the European Commissioner responsible for the single currency project, assured an audience in Washington yesterday that EMU remained on course.

His remarks followed comments by IMF officials at the weekend warning that any delay to the single currency would risk causing turmoil on the foreign exchanges.

Mr de Silguy said he had no fear that France and Germany would miss the economic targets set out in the Maastricht Treaty. He added that it would be "out of the question" to weaken the criteria.

New economic forecasts from the Commission last week predicted that thesse two countries, along with others, would just scrape under the 3 per cent of GDP ceiling for their government budget deficit.

The same EU forecasts showed Italy missing the budget criterion. Separate predictions by the IMF last week showed France and Germany joining Italy outside the 3 per cent limit.

But Mr de Silguy said yesterday that the Commission's predictions would not necessarily exclude Italy from joining the single currency. The decision, to be made early next year, would look at the structural reforms that had been carried out in each country, he said.

He stressed that the EU heads of state will make their decision about which countries can join the first phase based on "real figures for 1997 and the budget proposals for 1998".

Lamberto Dini, Italy's foreign minister, also speaking in Washington, said that the country's hopes of participating in the first phase of EMU depended on drastic reforms to the pension system. He said: "Italy has a window of at most four months to take the difficult decisions."

Carlo Ciampi, the Treasury Minister, insisted that Italy would be within the 3 per cent ceiling in 1997, the key year for qualifying for the first wave. The Italian government has passed a drastic 1997 budget package, including a one-off "Eurotax", that Mr Ciampi said would be sufficient for the deficit target to be met.

IMF officials warned at the weekend that a delay to the single currency project would lead to "substantial dangers". Massimo Russo, a special adviser on EMU to the Fund, said it would not matter if some countries had budget deficits just above the 3 per cent ceiling.