According to a report by the EU published yesterday, candidate countries are succeeding in achieving macroeconomic stabilisation and are making great strides in advancing structural reforms, including in the financial sector. Their capacity to cope with potential future macroeconomic and financial sector challenges has considerably improved. Yet, this capacity must be continuously reinforced and adapted as economic development creates new challenges for macro-economic policies and as financial sectors, at an early stage of development, mature.

"Despite the degree of stability that has been achieved, candidate countries need to remain attentive towards macroeconomic and financial sector stability challenges. » commented Pedro Solbes, EU Commissioner for economic and monetary affairs. "It is crucial that they develop their own capacity for implementing permanent and continuous system-wide risk monitoring as their economies dynamically expand. A regular in-depth dialogue between Member States and candidate countries, will further assist candidate countries in coping with these challenges and foster their successful integration into the economic multilateral surveillance mechanisms of Economic and Monetary Union."

Candidate countries' real convergence with current Member States has so far been relatively modest and the performance has been mixed. Average GDP per capita on a purchasing power standards (PPS) basis for all 13-candidate countries reached only 35.2 percent of the EU average in 2000. In their run-up to EU accession, with the adoption and implementation of the Community acquis and of the economic reforms needed for accession, candidate countries are creating an enabling environment for growth. This "legal and institutional convergence" and the opening-up of their markets, including financial markets, to the EU, are likely to support strong real convergence. Economic policy will have to ensure that the growth process unfolds smoothly and that excessive growth fluctuations are avoided in particular overheating and boom-bust cycles, which often result in problems for the external and financial sector.

The Commission’s services will use the report on Macroeconomic and Financial Sector Stability Developments in candidate countries to nourish the dialogue in the 26 March high-level meeting between members of the Economic and Financial Committee and their counterparts in candidate countries. The report and conclusions of the dialogue will be presented to the November Ecofin Council.