09/07/2013 - News
The Eurogroup welcomed the staff level agreement reached between the Greek authorities and the Troika, and the progress made in implementing the required fiscal and structural reforms.
Jeroen Dijsselbloem at the Eurogroup in Brussels
© European Union, 2013
The Eurogroup found that macroeconomic developments were in line with the programme’s projections and pointed to a return of growth next year: a sign that the adjustment efforts in Greece are starting to bear fruit. "We see significant improvements of cost competitiveness, impressive strengthening of the fiscal position and a more resilient banking sector", the President of the Eurogroup said. The Eurogroup expressed its appreciation for the efforts made by the Greek citizens.
The Eurogroup agreed that Greece would have to work to fully implement all the required conditions (prior actions) before the 19th July so that the next disbursement of the European Financial Stability Facility of EUR 2.5 billion can be approved once national scrutiny procedures have been completed. These prior actions require significant reforms that are still considered to be essential prerequisites for delivering sustainable growth, jobs and healthy public finances.
A further EUR 0.5 billion is to be disbursed in October on the condition that Greece meets a clear set of milestones agreed with the Troika partners, focusing on privatisation, arrears clearance and public administration reform. It is foreseen that 2 billion of profits coming from the ECB's Securities Market Programme (SMP) will be disbursed in conjunction with the EFSF disbursements: EUR 1.5 billion in July and EUR 0.5 billion in October.
The Eurogroup had a follow-up discussion on the June European Council
The Eurogroup discussed the timetable for the work on the Banking Union. It was felt that the Council should make a priority of agreeing with the European Parliament the Bank Resolution and Recovery Directive (BRRD) by the end of the year.
On this basis, the Eurogroup will be able to finalise the operational framework of the European Stability Mechanism direct recapitalisation instrument. The President of the Eurogroup stated that “As soon as we have the final adoption by the European Parliament of the Single Supervisory Mechanism (SSM), the SSM will start work in preparation of the comprehensive balance sheet assessments to be carried out next year.
“These assessments and accompanying measures will take away doubts about the solidity of the euro area banking sector. Once the SSM is established, the ESM will have the possibility to use the direct recapitalisation instrument.
The Eurogroup also underlined the importance of the work that would be undertaken in Council on the upcoming proposal o the Single Resolution Mechanism (SRM) by the end of the year.
The International Monetary Fund (IMF) presented the results of its Article IV consultation
The IMF Managing Director Christine Lagarde presented the main recommendations of the IMF's recent Article IV consultation.
The Eurogroup felt these recommendations were in line with its agreed strategy of which the focus is on:
- cleaning up bank balance sheets and moving towards a Banking Union
- pursuing differentiated and growth friendly fiscal consolidation policies
- and undertaking structural reform to enhance the competitiveness of our economies in the long-term.
Overall, risks were seen to have diminished and financial markets stabilised in comparison to last year’s evaluation. The Eurogroup and IMF agreed that keeping up the reform agenda was essential.
Eurogroup welcomes steps taken in Portugal to maintain government stability
The Eurogroup welcomed the new Finance Minister, Maria Luis Albuquerque who debriefed fellow ministers on the most recent political developments. The Eurogroup welcomed the recent steps to maintain the government’s stability and emphasised the authorities should continue their good track record and commitment to the adjustment programme.
Speaking of the programme, the President of the Eurogroup said that it “has been successful in brining about a much needed economic adjustment and previously accumulated imbalances have been reduced.” He also confirmed that the Eurogroup had been fully informed by the Portuguese finance minister regarding the political situation in Portugal and that the minister had given "her full commitment to programme for Portugal".
The Eurogroup emphasised that this reform effort must be sustained as is this crucial for regaining full market access by the end of the programme, mid-2014.
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