09 May 2016

Eurogroup statement on Greece

The Eurogroup welcomes the completion of a policy package, which should pave the way for a successful completion of the first review of the ESM programme, upon the adoption of the agreed prior actions.

Greece will implement as part of the prior actions for the first review:

• a first package of fiscal parametric measures amounting up to 3% of GDP by 2018; this package includes a pension reform, a reform of the personal income tax and additional fiscal parametric measures, such as a VAT reform and public sector wage bill measures;
• an additional contingency mechanism, which will be legislated to ensure that a package of measures, including non-discretionary measures, would be automatically implemented as soon as there is objective evidence of a failure to meet the annual primary surplus targets in the programme (3,5% in the medium-term). [...]

The first review includes also the implementation of the NPL strategy, which will contribute to strengthening the balance sheets of banks and enable the return of domestic credit to the Greek economy. As prior actions, measures will be taken to immediately open up the market for the sale and servicing of performing and non-performing loans, with the temporary exclusion of small loans secured by primary residences.

The Eurogroup recalls that a significantly strengthened privatisation programme is a cornerstone of the new ESM programme. In this context, the Eurogroup welcomes the agreement for the forthcoming adoption of the law establishing the agreed Greek Privatisation and Investment Fund, including an initial asset transfer, as part of the prior actions for the first review. The Supervisory Board of the Fund will be appointed by June 2016, and the Fund will become fully operational no later than September. [...]

The Eurogroup agrees on the following general guiding principles for the possible additional debt measures: (i) facilitating market access; (ii) smoothening the repayment profile; (iii) incentivising the country's adjustment process even after the programme ends; and (iv) flexibility to accommodate uncertain GDP growth and interest rate developments in the future.

The Eurogroup also agrees to establish a benchmark for assessing sustainability of the Greek debt, according to which under the baseline scenario of a debt sustainability analysis (DSA), Greece's gross financing needs should remain on a sustainable path. [...]

Full press release

Remarks by J. Dijsselbloem

© European Council