08 July 2019

Main results - Eurogroup

The Eurogroup looked at Greece's third enhanced surveillance report and discussed the eurozone's fiscal stance. In inclusive format, ministers continued working on deepening the Economic and Monetary Union.

Main results

Regular format

Croatia's intention to join the EU's Exchange Rate Mechanism (ERM II) 

In the margins of the Eurogroup meeting, representatives of the eurozone member states, the European Central Bank (ECB) and Denmark met in the presence of the European Commission and Croatia to discuss prospects of Croatia's participation in the ERM II. They adopted a statement.

Statement on Croatia's path towards ERM II participation

Greece

The Eurogroup discussed the third enhanced surveillance report on Greece. The report is not linked to a decision on the policy contingent debt measures.

The enhanced surveillance framework for Greece was activated in July 2018 and entered into force after Greece's ESM-financed programme ended, in August 2018. The enhanced surveillance reports are issued quarterly.

Eurozone fiscal stance

Ministers discussed the budgetary situation in the eurozone as a whole, focusing on prospects for 2020. The Chairman of the European Fiscal Board (EFB), Niels Thygesen, presented the EFB's recently published report. The EFB advises the Commission on the prospective fiscal stance of the eurozone.

In addition, the Commission presented its assessment of the budgetary situation based on its analysis of the 2019 Stability Programmes and its Spring economic forecast. The discussion feeds into the preparation of the draft budgetary plans and the recommendations for the eurozone for 2020.

The Eurogroup is required by EU law to discuss the budgetary situation and prospects in the eurozone as a whole, in the framework of the assessment of the draft budgetary plans of the eurozone member states. It therefore holds regular discussions on the eurozone fiscal stance.

Spain

The Eurogroup also looked at the main findings of the 11th post-programme surveillance mission to Spain which took place from 7 to 8 May. 

Post-programme surveillance (PPS) starts automatically after the end of a financial assistance programmes and continues until the country repays at least 75% of the financial assistance received. PPS missions take place twice a year.

International role of the euro

Ministers took stock of the outcome of the European Commission’s sectoral consultations and the latest economic analysis from the ECB as regards the international role of the euro.

ECB report on the international role of the euro">ECB report on the international role of the euro

Miscellaneous

The Eurogroup was informed about the Commission's decision in the context of the spring 2019 round of fiscal surveillance for Italy.

Ministers welcomed the decision by the European Council to nominate Christine Lagarde as candidate for the next ECB President.

Inclusive format

Deepening Europe's Economic and Monetary Union

Ministers discussed the follow-up to the Euro Summit of June 2019, including ESM reform, banking union and the budgetary instrument for convergence and competitiveness.

Leaders invited the Eurogroup in inclusive format to continue working on all the elements of the comprehensive package on the strengthening of the EMU, as set out in the letter of the President of the Eurogroup of 15 June 2019. Ministers also discussed the organisation of the work in the next semester.

Full press release

Remarks by Mário Centeno following the Eurogroup meeting

[...]Our first discussion was on the fiscal stance of the euro area. We have been monitoring economic developments very carefully across the euro area and that has been a topic of discussion in the Eurogroup, also in light of the slowdown last year. This is important to reassure us that we have the right policy mix in place – in each part and in the whole. Today we listened to the advice of the European Fiscal Board and took stock of the Commission’s analysis.

There is broad consensus that for member states with high debt levels, there is a need to rebuild fiscal buffers. At the same time, countries who have already built such buffers, can prioritise investments, boost potential growth and tackle long term challenges.

For 2020, based on current forecasts, appropriate and differentiated fiscal policies at the national level will lead to a broadly neutral fiscal stance for the euro area as a whole. Going forward, we will keep a close eye on the economy given the significant number of risks to growth that are looming.

Greece was back on our agenda today. The Commission presented the 3rd enhanced surveillance report, which assesses the ongoing implementation of reforms. Contrary to the last report, this one is not linked to a decision on further debt relief measures. As there were general elections in Greece yesterday, our discussion today was relatively short. We look forward to working constructively with the new government that will result from this election. We will look into the issues raised in the Commission’s report, and more broadly discuss the new government’s policy intentions going forward.

We also discussed Spain’s post-programme surveillance. The report is positive and Spain’s economic outlook continues to be strong. We welcomed the good progress made to strengthen the Spanish financial sector and encouraged the authorities to continue rebuilding fiscal buffers and reducing the public debt ratio.

Next, we looked into ongoing work to strengthen the international role of the euro. The Commission has been building the evidence base for possible initiatives at the sectoral level. This was not our first discussion on the topic and it will not be the last — it is a priority and we will take it forward as was requested by Leaders in December.

On Italy, ministers heard some good news. The discussions between the Commission and the Italian authorities have led to significant improvements in the 2019 budget. The Commission explained its recent decision that an Excessive Deficit Procedure is no longer warranted and Minister Tria provided some additional explanations on the measures taken by its government. Ministers commended efforts on both sides, which resulted in this positive outcome.

 

Ministers also welcomed the decision by Leaders to choose the next President of the ECB. I explained to the group what the appointment process will be. Euro area ministers in the Ecofin tomorrow are expected to formally nominate Christine Lagarde, which will lead to a consultation by the European Parliament and the ECB itself. The European Council will then confirm its choice in October. [...]

On our ongoing euro area reform process, ministers reviewed the conclusions of the June Euro Summit. Leaders welcomed the progress made thus far and asked us to continue working on it and finalise some files by December.

Today, we discussed how to go about this further work that is needed:

• On ESM reform, we will follow up from our June agreement on the ESM Treaty and finalise the full package by December. We can then start the ratification procedures in early 2020.
• In recent months we have worked on mapping out what a steady state Banking Union should look like. That includes EDIS. More technical work will take place until December to set out a transitional path, including the so-called roadmap to start political negotiations.
• On the budgetary instrument for convergence and competitiveness, Leaders asked us to work further on all open issues and to report swiftly on the appropriate solutions for financing. This is our priority right now and we aim to deliver in October, to pave the way for a broader debate on the MFF that will follow.
• Within the same timeframe, we will also look at the details of the allocation methodology, of the modulation procedure and of the governance aspects.

We will strive to deliver coherent and meaningful solutions in the coming months. For that we need a spirit of compromise of all sides. The all-nighter of the June’s Eurogroup is still in our memory and there’s a lot of work ahead of us. I will continue to approach this in a constructive spirit.

Finally, let me report to you on our novelty today. A meeting of ERM II members to discuss a letter sent by Croatia on its intention to join ERM II and Banking Union. This is a first step needed on a path to join the euro.

The Croatian authorities have set out actions they will take to ease the transition. We welcomed the commitments in the areas of banking supervision, institutional quality, governance and the business environment. These are highly relevant for a smooth entry and participation in ERM II. They show Croatia’s determination to be part of the euro family. [...]

Full remarks

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