07 December 2022

Remarks by Paschal Donohoe following the Eurogroup meeting of 5 December 2022

...discussion on the proposals from the Commission for a two-tier pricing system for energy....Eurogroup issued a lengthy statement regarding the budgetary plans for next year, responding back to the assessment of the Commission and laying out our views on the work that needs to be done.

May I begin by saying what a great pleasure it is to be joined by Commissioner Gentiloni and to welcome Pierre Gramegna in his new role as Managing Director of the European Stability Mechanism. For many press conferences you've all been asking about the process to appoint a new Managing Director of the ESM. All that effort and time has been worthwhile to now see a person of the calibre, experience and wisdom of Pierre now leading the ESM. All of the Eurogroup look forward to working closely with him in the time ahead, to support him and the work of the ESM.

About the agenda of the Eurogroup today: we started our meeting in inclusive format with all 27 member states where we had a very broad exchange of views regarding our current economic conditions and the policy response, with a particular focus on how we can better manage our response to the impact of high energy prices on our growth and our inflation. It is I think indeed the case that much of 2022 has actually turned out better than we would have expected. But at the same time, the challenges that we will face for 2023 are complex and will continue to be difficult.

For that reason, today we acknowledged the importance of the positive elements in our economic performance. Unemployment rates are falling to historic lows and an increasing amount of data indicates that the euro area has been more resilient in 2022 than we could have expected.

But as we look ahead, we are aware of the challenges that await. We discussed the need to further coordinate our economic support measures. I do believe that a window of opportunity exists in the early part of 2023 to look at how we can do that in a different way. In this regard we had a discussion on the proposals from the Commission for a two-tier pricing system for energy. While it is ultimately clearly the national responsibility of each member state to design its measures and to look at the level of fiscal support, there was a recognition from all of us that the work from the Commission is a very useful and helpful impulse at this point in time.

That set the scene for the discussion that we had in Eurogroup regarding the budgetary plans for next year and assessing the level of support in our economies for this year. Earlier this afternoon the Eurogroup issued a lengthy statement regarding the budgetary plans for next year, responding back to the assessment of the Commission and laying out our views on the work that needs to be done.

We agreed that broad based fiscal support to aggregate demand in 2023 is not warranted and acknowledged the risks that could be placed upon our inflationary outlook if energy supports in the current format were maintained in an unchanged way across all of 2023. This is work that we will continue to engage in month by month for next year. We want to further improve the quality of the design of these measures, make sure that the level of support is appropriate and look at how we can move closer towards a common approach.

On that note of a common approach, Commissioner Gentiloni presented an overview of the work that has been done on the economic governance review. This was the first discussion that has taken place in the Eurogroup on the substance of the Commission proposal, and there will be a further discussion on it in ECOFIN tomorrow.

I think at this point, there are two areas of consensus: there is very wide agreement that an effective system of economic governance is essential to the foundations of the euro area, and that we have a lot of work to do now in the early part of 2023 to respond back to the proposals from the Commissioner and to look at how we can move this debate forward in a constructive manner next year. All ministers are fully committed to doing that.

Our last substantive items referred to post-programme surveillance in the cases of Cyprus, Portugal, Spain and my own country, Ireland. The Commission again confirmed the assessment that these countries have the capacity to repay the loans they received in the context of their financial assistance programmes.

Then we had a specific discussion on Greece. This was both a first and a last time. It was the first time that this discussion happened under the standard post-programme monitoring arrangement. And this is the case because the Greek economy and the Greek government were successful in exiting from an enhanced surveillance programme. And we hope it is the last time that there was a Eurogroup statement adopted specifically on Greece. This was a very important and indeed a historic statement that was fully supported by all of my ministerial colleagues, because it confirmed that the conditions have now been met to release the last set of debt measures to the Greek economy. This amounts to €725 million in 2022 and to a sizeable relief going forward due to the reduced interest rates on certain EFSF loans.

This is a historic moment. The release of the final set of debt measures is a very important milestone for the Greek government and for all of us. Greece is now standing firmly on its own feet again, and as part of the European family is now participating in the standard and common fiscal and economic EU coordination procedures.

We then moved on to the election of the President of the Eurogroup because my own term comes to an end in January. I am delighted and humbled to have received the support of my colleagues for a further mandate. I look forward to working very closely with all of them in the really important work that the Eurogroup will continue to do to serve the people who share a common currency in the euro and to guide the euro area economy to even safer shores in these difficult of times. I thank all my ministerial colleagues for the confidence that they have shown in me. And I look forward to working intensively with them, as I have done in the last two years, to move our shared agenda forward.

EUROGROUP

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