EU Finance Ministers this evening reached an important deal on how the EU will monitor the administration of public finances by its member governments allowing also for the possibility of imposing sanctions against those member states which continue to ignore EU rules.

The deal was announced this evening by the President of the European Council Herman Van Rompuy following eight hours of talks and tough negotiations among the 27 Finance Minsiters in Luxembourg.

Calling the deal 'historic', Mr Van Rompuy said that EU finance Minsiters also agreed to consider recommending changes to the EU's governing treaties. Such changes, championed by German Chancellor Angela Merkel, would require approval of every EU member state to create new penalties and possibly a permanent 'crisis resolution mechanism.

According to the first details, the new deal will allow the European Commission to place countries on the path to being sanctioned even if they aren't violating the budget rules, which require countries to keep their budget deficits below 3 per cent of gross domestic product (GDP) and their total debt below 60 per cent of GDP.

The agreement envisions a two-step enforcement process: first, the Commission would designate countries that are close to or already violating the rules, a step that will require the assent of a qualified majority of EU countries. The second step will allow the Commission to impose sanctions automatically, unless a qualified majority of countries votes to block the sanctions.

The ministers agreed to allow the Commission to propose sanctions without going through the first steps if a country's finances are in particularly bad condition. This agreeement is now expected to be sealed during a special EU summit with the participation of the 27 EU leaders in Brussels next week.

Malta's Finance Minister Tonio Fenech represented Malta at today's talks.