The following is the full text of the Minister for Finance, Mr McCreevy's address to his fellow EU finance ministers yesterday:

Mr President

I am very grateful for the opportunity to give my views on the Irish Stability Programme Assessment and the proposal for a Recommendation to issue to Ireland under Article 99(4) of the Treaty.

At the outset, I should say that Ireland does not believe that there are reasonable grounds for such a recommendation in relation to the Broad Economic Policy Guidelines. Neither I nor the Government, and the majority of economic commentators, believe that such a proposal is warranted. Nor is it, in my view, a proportionate or even-handed response.

The concerns expressed in the draft recommendation are based on the wrong premise. The Commission's assessment and the Broad Economic Policy Guidelines advise Ireland to seek to achieve economic stability. This is exactly what the Irish Government has sought to do in the Budget in a number of ways, through:

Securing the continuation of social partnership and wage moderation and avoiding a wage/price spiral - this was a big factor in the Government's strategy in view of social partnership's contribution to our economic success;

Promoting measures to encourage increased labour supply and productivity;

Taking action to reduce price inflation, including indirect tax reductions, so as to counter the inflationary psychology; it was important to quash inflationary expectations before they took hold;

Delivering the largest fiscal surplus in the EU, reducing the debt burden to the second-lowest in the EU; and

Using the Budget surplus wisely by providing large sums (6 per cent of GDP) for future ageing costs.

In fact, the Broad Economic Policy Guidelines for Ireland enjoin us to safeguard social partnership and to stimulate labour supply increases by tax/ benefit responses. It is very difficult to see how one can be taken to task for a response in fiscal terms which seeks to adhere to the thrust of the BEPGs in the first place.

According to the Explanatory Memorandum to the Recommendation, we have ignored repeated warnings from the Council and continued on an expansionary course. However, the Commission's own CABB calculations do not support this.

On the Commission's own figures, our fiscal stance over the past three years has been contractionary; and will be contractionary again over the 2001-03 period as a whole. Therefore, we are not repeat offenders in any sense and this allegation of ignoring repeated warnings simply doesn't stand up. The previous Council opinions were adopted by the Council without any qualification or suggestion that we did not adhere to the guidelines.

As regards 2001, the Commission methodology overstates the extent of fiscal loosening substantially, due to once-off factors.

We have written to the Commission explaining the adjustments required to show the true position. The Commission in its Report has not paid enough attention to this aspect. In particular, we are moving to a calendar tax year in 2002. This gives rise to a nine-month tax year in 2001 and to some unavoidable cash flow losses to our Exchequer. These, however, have a limited impact on the real economy.

I have no problem with advice to Ireland setting out the Council's view of the appropriate policy mix for the future. This can take the form of an opinion, as is the normal course. It is very difficult for me, in the light of the comparative performance of the Irish economy, to see that any recommendation is warranted. This performance is detailed in a table which I will circulate to colleagues with the text of this intervention. There are a number of statistics in that table which colleagues may wish to focus on in regard, for example, to budget surpluses, debt GDP ratios and public spending levels.

The table shows that, among other things, we are running very large budget surpluses and setting aside substantial sums to fund future pensions while at the same time our public expenditure levels per capita are significantly below that of other EU countries. We have tried to take a prudent course in the light of very significant pressures to increase spending and to use our surplus for other purposes.

In relation to price inflation Ireland has acted to address this in our Budget - although the increase was largely externally generated because of our open, trading economy. The latest figures show that inflation as measured on the harmonised European basis has fallen from 6 per cent in November to 3.9 per cent now. This rate is lower than the rate in a number of other member-states on the basis of latest available data. While month-by-month changes are difficult to predict, the inflation rate is expected to decline further during the course of the year.

It is very important that any action proposed in relation to compliance with the Broad Economic Policy Guidelines should be proportionate and evenhanded as between the different member-states, and I hope that colleagues can agree with this.

One last point I must make is to voice my deep concern at the public manner in which this debate has been conducted by the Commission. This has not been helpful all round. Since the Council decides on whether to publish the Recommendation, it is unacceptable for drafts to be published in advance of this. This is something we should all consider for the future in all the member-states' interests.