Tag Archives: Eurogroup

Mário Centeno new Eurogroup President

“I am highly motivated to take on the helm of the Eurogroup. We have a unique window of opportunity to deepen monetary union, making our common currency more resilient against future crises. Our responsibility is to deliver and meet the expectations of our citizens. I will spare no efforts to bring about the necessary consensus. I would also like to thank Jeroen Dijsselbloem for his strong leadership in the Eurogroup in a period where the euro area was put to the test”. Said Mr Centeno.

Mário Centeno start his mandate as Eurogroup President, taking over from Jeroen Dijsselbloem who served in the position since 2013. Euro area finance ministers elected Mr Centeno Eurogroup President on 4 December 2017, for a term of two and a half years.

Mr Dijsselbloem said: “The eurozone is in much better shape now than in 2013. We have economic growth in all countries, unemployment is falling and public finances are on a sounder footing. Decisive steps have been taken to strengthen the monetary union, notably the banking union. I would like to wish Mário Centeno all the best in his new role as Eurogroup President.”

To mark the handover of the Eurogroup Presidency and complete the transition of tasks, Mr Dijsselbloem and Mr Centeno had a working meeting where they also discussed the Eurogroup agenda.

Mário Centeno is finance minister of Portugal, a position he was appointed to in 2015. The first Eurogroup meeting under the presidency of Mr Centeno will take place in Brussels on 22 January 2018.

Eurogroup: remarks by Jeroen Dijsselbloem

Remarks by Jeroen Dijsselbloem following the Eurogroup meeting of 9 October 2017

“Let me start by saying that today was Wolfgang Schäuble‘s last Eurogroup. A number of colleagues took the floor to thank him and bring back to memory his long involvement. He was in the Eurogroup for 8 years, but he has been a very strong participant in discussions about Europe for, I would almost say 45 years – I believe he has been in domestic politics for 45 years. He was there and actively involved at the start of the euro and the monetary union.

He was, as I said, member of the Eurogroup for 8 years, therefore present and very actively involved during all those crisis years in which the Eurozone almost fell apart. Some have said that Wolfgang Schäuble is dominant because Germany is dominant. Germany is a large country, but I think that is completely misunderstanding his position and the authority that he has among us, the colleagues. This has to do with his experience, but also his wisdom and his strong focus on the European interest. I’ve always been convinced, even in the toughest discussions that we had in the Eurogroup in the five years that I was involved, that he always put the long term interest of a strong and stable Eurozone first. He always kept a very strong view of that long term interest. And I think that has been mutually valuable for all of us.

So we thanked him, professionally and personally, and wished him well in his new and very important job in Berlin. Of course, we will immediately meet him again tomorrow at Ecofin, but it was his last Eurogroup. And then Washington, where he will also join us at the IMF/World Bank meetings.

Our main discussion today was on the role of the ESM. A discussion that, of course, takes place in the broader context of the future of the monetary union. Next month, we will continue that debate when we will focus on the completion of the banking union and on a number of fiscal issues, both the present fiscal framework – is it effective? how should it be changed, if it should be changed? – but also what possible new instruments we would need in terms of fiscal policy. So those are the topics for next month.

Today, we focused on the role of the ESM, along, basically, 3 strands. First of all, the role of the ESM in crisis management: how it could be strengthened, deepened. Secondly, the role of the ESM in the completion of the banking union. And thirdly, issues of governance and relation with the EU legal framework.

It was a very good discussion. Among the member states, the ministers, there was quite a strong agreement on that we should work predominantly within the current legal framework, in the ESM treaty. It means that the current governance setup could, in general terms, work also for the future, not precluding future changes or integration, in the future, in the European institutional frameworks.

Secondly, there was a strong positive sense about the work that the ESM has done. The ESM has now existed for five years and has been very effective, both on the financing sides and in bringing in the money on both sides of the balance sheets so to speak. Number of colleagues have pointed out that the ESM has more instruments than it has so far used. We could look at that to see what future role, further role, could be envisaged, but also possible additional instruments. Also that should be further discussed. I think everyone agreed that the ESM has a very strong role to play, not just in crisis management but possibly also in the prevention of the future crises.

And, finally, there was quite a broad support in involving the ESM in providing a backstop to the single resolution fund. Of course, as you know, that’s part of the roadmap for the banking union which outline number of actions that need to take place. I think next month we will discuss that whole agenda, that whole roadmap, but there seems to be a strong support for the ESM in the role of a backstop.

So I was quite happy with that debate and we will continue it and complete it working towards the eurozone summit in December.

Also, today, we discussed the topic of the tax wedge on labour. As you may recall, since 2014, we’ve had this topic on our agenda, following it closely. The Commission is monitoring progress, we’ve developed common principles to guide the reforms of the tax wedge. The euro-area tax wedge on labour is still very high, also looking at OECD statistics. There are also some big differences between countries.

Today, three of our colleagues shared the progress they have made on this topic, in Austria and in Belgium. And the French minister talked about the progress made in the past, for example in the period that Pierre Moscovici was minister in France, and the plans that the current French government has for the future. So, lots of lessons to be learned, also on how to finance these tax reforms. We will come back to that already in December, when the Commission will also report, this is an annual exercise, on the progress being made throughout the eurozone on the topic of the tax burden on labour. We will come back to that in December and continue this push for reforms.

Finally, we had two recurring items on our agenda. One is the post-programme monitoring for Portugal, the second one was a short discussion on exchange rates developments.

We commended Portugal for the recent improvements in economic performance, while, of course, recalling the importance of maintaining the reform momentum and continuing on the road of fiscal consolidation.

On exchange rates we noted that the euro has strengthened in recent months but it is broadly in line with long term averages.

Finally, let me make a few remarks, because you will ask me anyway, about my position. The rumour is that we will have a new government in the Netherlands. The latest news is that it could be in office in the week of 23 October, so I would leave my job in that week. I have put to the colleagues in the Eurogroup today that it would be my intention to complete my mandate which runs until 13 January, of course, if the colleagues in the Eurogroup would support that. There was unanimous support for that, everyone was content with me staying on until mid-January.

Finally, I said a few words about the election process of a new chair of the Eurogroup. His or her mandate would start as of the Eurogroup of January, but the election should take place at the end of the Eurogroup meeting in December. Candidates can be put forward in the two weeks before the Eurogroup of December, so starting on 4 December. And then, hopefully, in the January Eurogroup there will be a new chair.”

Remarks by Jeroen Dijsselbloem following the Eurogroup meeting

Welcome to this Eurogroup press conference. We had a short meting today in the Eurogroup. First of all, I want to thank the Estonian Presidency of course for their hospitality and for allowing us to be in this very inspiring surroundings.

Let me first make a remark on the ongoing economic recovery. I’m not sure whether we should even talk about recovery anymore. In the Eurozone, growth keeps picking up, it is set to remain robust, it’s broad-based, it’s across all our countries. Of course, risks remain and work needs to be done to deal with those risks, but confidence is ever increasing and I think that’s hugely welcome.

 

We started our first meeting after the summer break with a discussion  on how to make our monetary union more resilient, which is vital for its sound functioning. The discussion took place about what is the responsibility of member states and what is the responsibility of the monetary union or the European Union, and I think reducing vulnerability. There are 3 aspects regarding resilience. First of all, of course, how we can make sure that we are less vulnerable to economic shocks. Secondly, how we can increase the absorption capacity. So this is how when the economic shock occurs, how it is being dealt with, absorbed, by institutions, by markets, by households, by companies. And thirdly, about enabling a faster economic recovery after a shock. And that, of course, is one of the lessons learnt from the crisis. We were much too slow in absorbing the shocks. We weren’t ready and fit to absorb the shocks, neither on the private nor on the public side, and it took a very long time to recover. Certainly, if you compare for example to how the US recovered from the crisis. So the three phases: reducing vulnerability before the shocks, absorption of the shock when it occurs, and having a fast recovery after the shock. Those were the elements discussed.

It is of course an umbrella issue, because when you get into it, it is again about the kind of structural reforms needed at national level, finishing the banking union, completing capital markets union so markets can absorb more shocks, improving our governance and institutional frameworks, both national and European. Many of those topics we will also return to today, tomorrow, in the coming months when we discuss the future of the monetary union.

So we will build on today’s discussion, bringing the topics back on our agenda in the coming weeks, putting it in the work programme of the Eurogroup, and start work this autumn on topics that are right in front of us, like finishing the banking union – the Commission already has proposals on the table -, doing more work on the capital markets union where proposals are on the table, while we discussed the future elements of the monetary union.

Second topic today was the state of play in Greece, the planning for the third review in Greece.

We got a report from the institutions on topics that are being worked on at the moment. Technical teams are at the moment in Athens, fact-finding and preparing the grounds, so that later on the third review can get off to a quick start. The idea is to finish that before the end of the year. More work needs to be done of course on a number of issues some of which were already mentioned today.

A sign that Greece has come a long way is the proposal to abrogate the excessive deficit procedure, which we welcomed today and is expected to be adopted by the Council later this month.

We also addressed ongoing court cases against the previous director of Elstat. Let me underline here again that, across the room in the Eurogroup, great concern was expressed about the ongoing court cases, the effect that it has internationally on the confidence in Greece and the process of modernisation in Greece, including the independence, of course, of Elstat itself. That concern was underlined and stressed. But of course the judicial procedures will go their independent ways.

Eurogroup: focus on Greece and economic resilience

Greece

Greece’s Minister for Finance, Euclid Tsakalotos, and the institutions (the European Commission, the European Central Bank, the European Stability Mechanism and the International Monetary Fund) briefed the Eurogroup on the state of play of Greece’s ongoing economic adjustment programme.

They presented the expected timeline of the recently started third review of the programme. Greece will be required to complete some 95 actions, many of which concern the implementation of legislation that was adopted earlier during the programme.

Topics that will be covered in the third review include Greece’s budget for 2018, the review of social benefitslabour market reform, public administration-related matters, implementation of strategy for non-performing loans, energysector reform, and privatisation.

Economic resilience in the EMU

Ministers exchanged views on how to increase economic resilience in the Economic and Monetary Union.

They identified a number of policy areas, where improvements could lead to increased economic resilience. These include the need for the diversification of the economy, the flexibility of labour and product markets, taxation incentives for investment, quality of institutions, and other areas.

This initial discussion will guide the Eurogroup’s more concrete thematic discussions on growth and jobs in the future.

Economic resilience refers to a country’s ability to prevent and address economic shocks. It is particularly important for the euro area, where countries share a single currency and are highly interdependent, and where a lack of economic resilience in one country may rapidly lead to serious consequences in other euro area economies.

Eurogroup statement on Greece

Copyright: European Union

The Eurogroup welcomes that agreement has been reached between Greece and the institutions on a policy package of structural measures, which aims at shoring up growth and addressing the underlying structural imbalances in public finances and paves the way for a successful completion of the second review of the ESM programme.

The Eurogroup also welcomes the adoption by the Greek parliament of the agreed prior actions for the second review, notably the ambitious post-programme fiscal package, which is composed of an income tax reform broadening the tax base and a pension reform. Together they deliver net savings of 2% of GDP which will underpin the fiscal targets post-2018. It also contains a contingent expansionary package to enhance the growth potential of the Greek economy and to improve the Greek social safety net that will be implemented provided that the agreed medium-term targets are met. We also welcome the adoption of a package of decisive measures to effectively address non-performing loans (NPL), such as establishing an active secondary market, an Out-of-Court Debt Workout framework, as well as all actions to make the Hellenic Corporation of Assets and Participations (HCAP) fully operational.

Moreover, the policy package includes a large number of structural measures aimed at enhancing the growth potential of the Greek economy. With regard to labour market reforms, the Eurogroup welcomes the adopted legislation safeguarding previous reforms on collective bargaining and bringing collective dismissals in line with best EU practices. The Eurogroup also commends the Greek authorities for adopting legislation to implement OECD recommendations to strengthen competition, to facilitate investment licensing and to further open-up regulated professions. We welcome the commitment by Greece to continue on its reform path.

The Eurogroup also commends Greece and the European Commission for the exceptional mobilisation of EU Funds to boost investment in support of jobs and growth since July 2015, for a total amount of nearly EUR 11 bn. The Eurogroup calls upon the Greek authorities to work closely with the European Commission to ensure that additional EUR 970 million made available following the review of the national cohesion policy funding envelopes for the period from 2017 – 2020 are fully absorbed. Furthermore, we commit to continue to provide high-level experts to support the design and implementation of reforms through technical assistance projects.

In parallel the Eurogroup invites Greece together with the institutions as well as relevant third parties by the end of this year to develop and support a holistic growth enhancing strategy including improvements of the investment climate. Further options for mobilizing additional funds from national development banks and other international financial institutions (such as the EIB and EBRD) should be explored.

The Eurogroup supports the efforts of the Greek authorities to work with the European institutions on the creation of a National Development Bank that would coordinate the implementation of development and promotional activities. The Eurogroup calls upon Greece, the European Commission and IFIs to work together to strengthen the pipelines of viable investment projects. Efforts should be made to step up the technical assistance from the European Investment Advisory Hub with a view to facilitating the preparation of investable projects and the establishment of investment platforms.

Today the Eurogroup discussed again the sustainability of Greek public debt with the objective that Greece regains market access at sustainable rates. The Eurogroup reconfirmed the commitments and principles contained in the statements of May 2016. We noted that the implementation of the agreed short term debt measures already contributes to a substantial lowering of the gross financing needs (GFN) of Greece over the medium and long term and significantly improves the profile of Greek public debt.

The Eurogroup welcomes the commitment of Greece to maintain a primary surplus of 3.5% of GDP until 2022 and thereafter a fiscal trajectory that is consistent with its commitments under the European fiscal framework, which would be achieved according to the analysis of the European Commission with a primary surplus of equal to or above but close to 2% of GDP in the period from 2023 to 2060.

The Eurogroup concluded that debt sustainability should be attained within the framework of the debt measures envisaged by the Eurogroup in May 2016. In this regard, the Eurogroup recalled the assessment of debt sustainability with reference to the agreed benchmarks for gross financing needs: GFN should remain below 15% of GDP in the medium term and below 20% of GDP thereafter so as to ensure that debt remains on a sustained downward path.

The Eurogroup recalls that it stands ready to implement a second set of debt measures to the extent needed to meet the aforementioned GFN objectives, in line with the Eurogroup statement of 25 May 2016. This includes abolishing the step-up interest rate margin related to the debt buy-back tranche of the 2nd Greek programme, the use of 2014 SMP profits from the ESM segregated account, the restoration of the transfer of the equivalent of ANFA and SMP profits to Greece (as of budget year 2017), liability management operations within the current ESM programme envelope taking due account of the exceptionally high burden of some Member States, and EFSF reprofiling within the maximum Programme Authorised Amount.

The Eurogroup stands ready to implement, without prejudice to the final DSA, extensions of the weighted average maturities (WAM) and a further deferral of EFSF interest and amortization by between 0 and 15 years. As agreed in May 2016, these measures shall not lead to additional costs for other beneficiary Member States.

In order to take into account possible differences between growth assumptions in the DSA and actual growth developments over the post-programme period, the EFSF reprofiling would be recalibrated according to an operational growth-adjustment mechanism to be agreed. This mechanism will be fully specified as part of the medium-term debt relief measures, following the successful implementation of the ESM programme to make sure the GFN benchmarks defined above are respected and to ensure that the ceiling established by the EFSF Programme Authorised Amount is respected. The Eurogroup mandates the EWG to work further on this as of 2018.

At the end of the programme, conditional upon its successful implementation and to the extent necessary, this second set of measures will be implemented. The exact calibration of these measures will be confirmed at the end of the programme by the Eurogroup on the basis of an updated DSA in cooperation with the European institutions, so as to ensure debt sustainability and compliance with the European fiscal policy framework. This DSA, while based on cautious assumptions, will also take into account the impact of growth enhancing reforms and investment initiatives.

For the long term, the Eurogroup recalls the May 2016 agreement that in the case of an unexpectedly more adverse scenario a contingency mechanism on debt could be activated. The activation of this mechanism would be considered subject to a decision by the Eurogroup and could entail measures such as a further EFSF re-profiling and capping and deferral of interest payments.

Acknowledging the staff level agreement reached with Greece on policies, IMF management will shortly recommend to the IMF’s Executive Board the approval in principle of Greece’s request for a 14-month Standby Arrangement. The IMF welcomes the further specification of the debt measures given today by Member States, and agrees that it represents a major step towards Greek debt sustainability. The IMF arrangement will become effective with resources made available in accordance with its terms, provided that the programme stays on track, when IMF staff can assure to the IMF’s Executive Board that there is an agreement on debt relief measures, that, appropriately calibrated at the end of the programme, would secure debt sustainability.

In view of the full implementation of all prior actions and subject to the completion of national procedures, the ESM governing bodies are expected to approve the supplemental MoU and the disbursement of the third tranche of the ESM programme amounting to EUR 8.5 bn to cover current financing needs, arrears clearing, and possibly room to start building up a cash buffer.

In view of the ending of the current programme in August 2018, the Eurogroup commits to provide support for Greece’s return to the market: the Eurogroup agrees that future disbursements should cater not only for the need to clear arrears but also to further build up cash buffers to support investor’s confidence and facilitate market access.

Greece awaiting debt relif

Debt relief for Greece will be looked into at the next Eurogroup meeting on 22 May, according to Jeroen Dijsselbloem. The president of the informal body of the eurozone’s finance ministers made the announcement during a plenary debate in Parliament on 27 April. He also apologised to MEPs about recent remarks that proved controversial.

Dijsselbloem attended a plenary debate on the second review of the economic adjustment programme for the country. The Eurogroup president said debt relief was a possibility: “Last year we gave that commitment to come back to this issue of [debt] sustainability for Greece because that’s the only way they will come back on a sustainable path and a sustainable economic future.”

Economics commissioner Pierre Moscovici, who also took part in the debate, added:  “The Commission will continue to support efforts to make Greek debt more sustainable. We believe it’s necessary and possible.”

Greece is currently in the middle of its third bailout programme since the financial crisis. On 2 May, Greece reached a preliminary technical agreement with its creditors, which means the country is set to have the next tranche of funding approved in time for its next debt repayments of €6 billion in July.

Greece’s primary budget surplus, an important indicator of the country’s public finances, increased to 3.9% last year, beating all the creditors’ targets, according to data from Eltat , the national statistics service.

During the debate in plenary Roberto Gualtieri, an Italian member of the S&D group, said the news about the primary surplus for 2016 showed that the Greek economy was at a turning point and urged the next Eurogroup meeting to formally conclude the current review and address debt relief.

Ska Keller, the German chairs of the Greens/EFA group,  said that now that Athens had delivered, it was time for the Eurogroup to do its part and give Greece its debt relief.

Two Greek MEPs – ECR member Notis Marias GUE/NGL member Dimitrios Papadimoulis – both highlighted the current devastating state of the Greek economy with Marias calling it a “social cemetery”.

Apart from the economic situation in Greece, MEPs addressed recent controversial statements by Dijsselbloem  in an interview with German newspaper Frankfurter Allgemeine Zeitung, in which he was quoted as saying about southern European countries: “You cannot spend all the money on drinks and women and then ask for help.”

“I really regret the comments you made recently on southern countries because the social distress that many of our citizens are suffering deserves more than that,” – Françoise Grossetête, a French member of the EPP group, said.

“Many members of the Parliament have been very critical about my remarks, and of course I fully accept that. The choice of words has been unfortunate and people have been offended and I regret that,” – Dijsselbloem replied.

Greece in lethargy of recession

greece-oxi

Greece and its international lenders made clear progress towards bridging differences over its fiscal path in coming years, moving closer to a deal that would secure new loan disbursements and save the country from default.

“We made substantial progress today and are close to common ground for the (lenders’) mission to return to Athens the coming week,”  Jeroen Dijsselbloem said on Friday.

Greek Finance Minister Euclid Tsakalotos met with the chairman of euro zone finance ministers Jeroen Dijsselbloem and top officials from the European Central Bank, the euro zone bailout fund, the European Commission and the International Monetary Fund to break a two-month deadlock in talks.

“We can’t undertake a debt haircut for a member of the European single currency, it’s ruled out by the Lisbon Treaty,” – said Gemran Finance minister Wolfgang Schaeuble said on broadcaster ARD. “For that, Greece would have to exit the currency area.”

Eurogroup discusses Greece and Portugal

eurogroup-jeroen

Today the Eurogroup will discuss the progress achieved to date in the ongoing second review of Greece’s economic adjustment programme, based on the updates by the European institutions participating in the review.

Ministers will also look into the implementation of the short-term debt relief measures, which Eurogroup endorsed at its meeting on 5 December 2016.

The institutions will brief the Eurogroup on the respective outcomes of the 6th post-programme surveillance mission to Ireland, and the fifth post-programme surveillance mission to Portugal. Both missions took place between the end of November and the beginning of December 2016.

The aim of post-programme monitoring is to see whether there are any risks that might jeopardise the member state’s ability to repay the loans which it received under a financial assistance programme. The monitoring is carried out until at least 75% of the received assistance has been repaid.