13 June 2019

Main results - Eurogroup

The Eurogroup agreed on a term sheet on the future budgetary instrument for competitiveness and convergence and reached a broad agreement on revising the ESM treaty text. Ministers also briefly discussed Italy's budget plans.

EMU deepening - preparation of the June Euro Summit

Following the mandate received by EU leaders at the 14 December Euro Summit, the Eurogroup in inclusive format continued discussing the deepening of the Economic and Monetary Union (EMU) with a view to preparing the Euro Summit in June.

Ministers agreed on a term sheet describing features of the budgetary instrument for competitiveness and convergence. This term sheet will be submitted to the President of the European Council ahead of the upcoming Euro Summit.

The Eurogroup also reached a broad agreement on revising the ESM treaty text to implement the political agreement reached at the Euro Summit in December 2018. This agreement covers issues such as the common backstop for bank resolution, the precautionary instruments as well as institutional aspects and the issue of cooperation between the ESM and the European Commission within and outside programmes.

ESM treaty (press release, 15 June 2019)">Economic and Monetary Union: Eurogroup agrees term sheet on euro-area budgetary instrument and revised ESM treaty 

IMF Article IV review of the eurozone

The International Monetary Fund's (IMF) Managing Director, Christine Lagarde, presented the outcome of the IMF's Article IV consultation with the eurozone. The IMF is expected to publish the final report shortly.

The IMF carries out such consultations every year with all of the IMF members, both individual countries and currency regions, including the eurozone. This is done in accordance with Article IV of the IMF's Articles of Agreement.

Thematic discussion on growth and jobs - inequality

The Eurogroup discussed inequality in the eurozone, based on the European Commission analysis as well as a presentation by Philippe Aghion, a French economist and Professor at the College de France and at the London School of Economics. He joined the meeting at the Eurogroup President's invitation and gave a presentation on how to reconcile innovation and inclusive growth.

Promoting conditions leading to inclusive growth is among the Eurogroup's priorities, and key to better functioning of the Economic and Monetary Union overall.

Presentation by Philippe Aghion

Technical note to the Eurogroup by the Commission on delivering inclusive growth

Cyprus - post-programme surveillance

The European Commission and the European Central Bank (ECB) updated the Eurogroup of the main findings of their 6th post-programme surveillance mission to Cyprus that took place between 18 and 22 March 2019. The ESM informed about the results of its Early Warning System, and the IMF – on its 3rd post-programme monitoring mission to Cyprus. The Eurogroup concurred with the assessment of the institutions.

Post-programme surveillance aims to establish any possible risks to the country's ability to repay loans received under its earlier adjustment programme. The surveillance continues until at least 75 % of the loan has been repaid.

Eurogroup work programme 2/2019

The Eurogroup adopted its work programme for the second half of this year.

Commission spring package

The Commission briefly informed ministers of its recent spring package, including some Stability and Growth Pact (SGP) related steps. In this context, the Eurogroup briefly discussed the situation in Italy. Ministers concurred with the Commission analysis and with the opinion of the Economic and Financial Committee (EFC) that a debt based Excessive Deficit Procedure (EDP) is warranted. Looking ahead, further elements put forward by Italy could be taken into account.

Economic and Monetary Union: Eurogroup agrees term sheet on euro-area budgetary instrument and revised ESM treaty

Ministers agreed on:

• a term sheet describing the main features of the budgetary instrument for competitiveness and convergence.
• a revised ESM treaty draft, covering issues such as the common backstop for bank resolution, the precautionary instruments as well as institutional aspects and the issue of cooperation between the ESM and the European Commission within and outside programmes.

Both documents, together with a cover letter from the President of the Eurogroup summarising all the main elements of the Eurogroup's discussion on the EMU reform, have been submitted to the President of the European Council, in preparation of the Euro Summit of 21 June.

 

Letter by President Centeno to President Tusk on the deepening of the economic and monetary union

Term sheet on the budgetary instrument for convergence and competitiveness

Remarks by Mário Centeno following the Eurogroup meeting

[...]We were quite fast in dealing with the first part of our agenda. A bit less so in the second part, on the EMU reform.

Our aim was to make further progress on three key areas ahead of the euro summit: the budgetary instrument for convergence and competitiveness, the ESM Treaty and Banking Union.

Firstly, we agreed on the main features of the budgetary instrument. That was exactly the mandate we had obtained from leaders in December. We agreed on a term sheet describing these features that I will submit to the President of the European Council.

This is an important step forward in the process of deepening the single currency. The instrument will help to increase the convergence and competitiveness of our economies, through a more inclusive growth, better resilience and an enhanced euro area governance process.

The Eurosummit and Eurogroup will have a strategic role on defining the precise priorities that should be financed. The instrument will finance structural reforms and public investments in coherent proposals from member states, reflecting our common guidance and other necessary conditions.

When we talk about a budget, the size matters and that will be decided by Leaders later in the year. But the design of the instrument is also relevant. On governance, we will work to codify the dedicated governance arrangements in an additional act. On financing, our discussions have covered a lot of ground but more work is definitely needed to define the appropriate sources of financing. We will continue to explore options at political level.

We agreed on a comprehensive list of main features and now there is still some work ahead of us to close the remaining elements and put everything in place. This is nevertheless a step forward.

We have also reached a broad agreement on revising the ESM Treaty to implement the political agreement reached in December 2018. This agreement covers a wide range of issues including the common backstop for bank resolution and the precautionary instruments. There are also institutional aspects and the issue of cooperation between the ESM and the European Commission within and outside programmes.

This was not yet the end of our work on ESM reform. In the second half of the year, we will need to align a series of related legal documents with the revised ESM Treaty. This will then allow us to conclude an agreement on a full package of documents by the end of the year, and to kick-start the ratification process. This is in line with our December agreement.

On Banking Union, we have decided since December to broaden the scope of our discussions on a European deposit insurance scheme (EDIS).

We established a High-level Working Group (HLWG) at the level of our deputies in January. The report by the chair of this group sets out a broader vision of what the key elements of the future "steady state" Banking Union could look like. There is broad convergence on the principles that should guide the further strengthening of the Banking Union.

Countries are not yet ready to take a decision on the next steps. More work is needed on this file and we have to to define the sequence of the decision making process. This should include the development of a roadmap towards beginning political negotiations on a European deposit insurance system (EDIS) and we have mandated the HLWG to report back again in December 2019. The result could then feed in the next institutional cycle.

Full remarks

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