17 February 2014

Remarks by Jeroen Dijsselbloem and Olli Rehn at the press conference following the Eurogroup meeting

Eurogroup/Dijsselbloem

ESM's direct recapitalisation instrument

We have reviewed the operational framework of the future ESM direct recap instrument. We have made progress towards resolving the last outstanding issues and I am confident that we will come to a political agreement in time for our meeting in March. (position of the German Finance Ministry)

SRF

After this press conference, I will chair a ministerial meeting on the intergovernmental agreement on the functioning of the Single Resolution Fund, the so-called Eurogroup+. The aim of the meeting is to review the main open issues that have arisen since the discussion started in January. Negotiations are still ongoing at technical level so I don't expect an agreement tonight, but I hope that we will be able to give political guidance for the further work so that the negotiations on this agreement are concluded in March together with the trilogues on the SRM Regulation.

Economic situation

The economic outlook of the euro area is improving. Euro area real GDP growth is picking up in recent quarters, and economic activity is expected to continue recovering. The euro area has so far also shown resilience as far as the recent emerging markets economies turmoil is concerned.

At the same time, we all realise that there is no time for complacency. Unemployment in the euro area may have stabilised but is still at an unacceptably high level. We thus need to take ambitious measures to reduce unemployment. We also need to implement bold structural reforms in order to enhance our competitiveness and to continue on the track of differentiated and growth-friendly fiscal consolidation. In all these areas, considerable progress has already been made in the recent years, but work is far from completed.

We now look forward to the publication of the Commission's winter forecast later this month and will continue our close monitoring of the economic developments on that basis.

Cyprus

The Troika debriefed us on the main findings of the third review mission. We of course welcomed the conclusion of the Troika that the programme remains on track. The macro-economic and fiscal data for 2013 turned out to be better than expected and that is of course good news. In addition it is good to see that the financial sector is stabilising in Cyprus, allowing for the second phase of the gradual relaxation of restrictions to start shortly.

Press release

VP Rehn

Greece

For the past two months, our mission teams have taken forward the work on the review from their respective headquarters, maintaining close contact with the Greek authorities in Athens. Our position has been that our mission teams should only return to Athens once a sufficient amount of preparatory work has been carried out to ensure a reasonable chance of the next mission reaching a staff level agreement.

While there remain a number of open issues, there has been some encouraging progress in recent days. On the fiscal side, it appears that the outcome for 2013 may be better than expected, though we must reserve our final judgement until Eurostat publishes its validated data on 23 April. Discussions regarding the fiscal gap for 2014 and 2015 are ongoing. Moreover, it is imperative that the authorities take forward the many structural reforms under discussion, which are essential to boost the economy's capacity to generate growth and job creation, which really matters for Greece and Greek citizens.

In view of the progress made and the reassurances given this evening by Finance Minister Yannis Stournaras, I can confirm that we now expect our mission teams to return to Athens in the coming days, towards the end of this week. It is in the interest of all partners, but first and foremost in the interest of Greece, to do what it takes to allow for a conclusion of the review by taking these structural reforms forward to boost the economic capacity to generate growth and employment, and to do so as soon as possible. I believe that we can, if everyone sticks to the plan, conclude the review during the month of March.

Full remarks

Meanwhile Handelsblatt cites an internal German Finance Ministry document ahead of the meeting, which says that a political agreement in the eurogroup over the question whether or not the ESM can directly recapitalise banks "is not to be expected". One of the contentious issues was the "extent to which first the shareholders and creditors of a bank must make a contribution before a direct recapitalisation by the ESM would even be considered", wrote Schäuble's officials in the preliminary report for the meeting. "From the perspective of the federal government, a comprehensive so-called 'bail-in' would be an essential condition for the eventual adoption of direct banking risks by the ESM." This issue would still be "discussed in depth in the coming weeks".

© European Council