Eurogroup takes stock of ongoing programmes, discusses financial assistance to Cyprus

 © European Union, 2012 

From left to right: Irish Minister for Finance Michael Noonan,
Cyprus Minister for Finance Vassos Shiarly,
President of the Eurogroup Jean-Claude Juncker
and Finnish Minister for Finance Jutta Urpilainen.

04/12/2012

At the meeting on 3 December the Eurogroup discussed the "building blocks" of a future macroeconomic adjustment programme for Cyprus, were debriefed on the Greek debt buyback operation that was launched on the same day, and took stock of progress achieved in the implementation of ongoing programmes in Spain and Portugal.

Greece: presentation of the debt buyback plan 

The Greek minister of finance, Yiannis Stournaras, debriefed the Eurogroup on the preparations for the debt buyback operation. The aim is to reduce Greece's outstanding debt held by the private sector, thus helping to meet the terms of the agreement reached last week by euro-area finance ministers. 

This should enable Greece to cut its debt to 124% of GDP in 2020 and to below 110% in 2022. 

Ministers agreed to meet again on 13 December, when the results of the buyback operation will be clear and all necessary national procedures completed, to give formal approval to the next disbursement of financial assistance to Greece. 

Cyprus: adjustment programme 

Ministers discussed the draft memorandum of understanding for financial assistance to Cyprus. It outlines the main elements for the macroeconomic adjustment programme for the country, agreed by Cyprus and the Troika (European Commission, European Central Bank and the International Monetary Fund). 

The President of the Eurogroup, Jean-Claude Juncker, said that on 13 December the ministers  would discuss the interim results of the due diligence exercise on the capital needs of Cyprus' financial sector and its implications on the financing of the programme. 

Spain: status of the bank recapitalisation 

Ministers reviewed progress on the bank recapitalisation programme in Spain, which was adopted in July this year to overhaul weak segments in the country's banking sector. 

"The implementation of the programme is well on track, meeting all required conditionality steps, as enshrined in the memorandum of understanding", said Mr Juncker. 

The Eurogroup welcomed the decision by the European Stability Mechanism (ESM) to authorise the disbursement of the first tranche of the programme – up to 39.5 billion euro – next week (11-12 December). 

The funds will primarily be used to reinforce the most severely affected financial institutions, whose restructuring plans were approved on 28 November by the European Commission. They will also contribute to the capital of a newly-created asset management company, which will acquire and manage banks' underperforming assets, thus strengthening the banks' balance sheets. 

Portugal: adjustment programme on track 

The Eurogroup discussed the results of the 6th review of Portugal's adjustment programme. It was concluded that the country continues to implement the agreed programme well, including fiscal and structural reforms. 

Following the review Portugal will receive another tranche of assistance – 2.5 billion euro – in January. 

The Eurogroup congratulated Malta on the abrogation of its excessive deficit procedure and briefly discussed the Commission's recently published blueprint on a deepening of the Economic and Monetary Union. Finally, it adopted its work programme for the first half of 2013. 

Mr Juncker announced that he would step down from the post of President of the Eurogroup by the end of this year or at the beginning of next year.