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[...]Let me start with Greece. We have achieved significant progress on the second review since the last Eurogroup in March. As you remember, then, on my initiative, we had changed the strategy, we had changed the order of things and we had intensified talks to, first of all, reach an agreement between the institutions and the Greek government on the key elements, the overarching elements, of the policy package, let's say the big reforms, and once that was achieved, to finalise details and solve the remaining smaller issues. We have been successful in doing so. So that is the news I can bring you today. We have an agreement on those overarching elements of policy, in terms of size, timing and sequencing of the reforms, and on that basis, further work will continue in the coming days, with a view for the mission to return as soon as possible to Athens to complete the work.
Let me give you some headlines. We have agreed on a 2% reform package, 1% in 2019 mainly based on pensions, 1% in 2020 in principle, mainly based on personal income tax. And we agreed that the Greek government can also, in parallel, legislate expansionary measures, on the assumption that the economy is doing better and the fiscal path is doing better than expected, and using the fiscal space that then will be created by these additional reforms.
[...] Once a Staff Level Agreement is reached, the Eurogroup will come back to the issue of the medium-term fiscal path for the post-programme period and debt sustainability, building on what we have already agreed in May 2016, in order to reach that overall political agreement. And it is very important for Greece that we do this as soon as possible. But, as we said, the big blocks have now been sorted out and that should allow us to speed up and go for the final stretch.
[...] We welcomed the news that the banking sector in the Eurozone, or should I say in the banking union, is in a better shape. But, of course, some important legacy issues still remain; are being addressed; have been clearly identified and we will take the necessary decisive actions within the banking union framework. Overall, we commended them for the excellent work done by these still relatively new institutions and encouraged both them and the Commission to continue to work closely together. Looking forward to our next debrief by them in the autumn.
Third, we held one of our regular thematic discussions on growth and jobs, today on supporting investment in the euro-area. Investment in the euro-area is running still at lower levels than before the crisis, particularly in some member states. Addressing barriers to investment is therefore a clear priority for euro-area member states and the euro-area as a whole. If we address these weaknesses, we can also work on the convergence of member states' economies, and that element of convergence should be our top priority in economic terms.
We started this work with a first exchange of views in July 2016 and followed it up in February, with a discussion on ease of doing business, particularly looking at public administration and sector-specific bottlenecks.
Today, we were able to build on that previous work and agreed on three common principles. These cover, in general terms: first of all, promoting private investment; secondly, prioritising productivity-enhancing public investment; and third, developing market-based sources of finance, broadening the sources of finance throughout the Eurozone. A document has been prepared by the Commission and will be published. Our common principles and statement has been drawn up by the Eurogroup. Our common principles will help us to focus on these reforms, we will exchange best practices, the Commission will monitor these topics for us, allowing the Eurogroup to regularly take stock of the progress that is made.
Finally, the institutions briefed us on their post-programme surveillance of Cyprus, one year after the end of the programme. There is very good news on the economic recovery which, together with progress in previous years in fiscal consolidation, has led to a strong primary surplus. If we go back to the debt of the Cypriot crisis, you will remember that there was a contraction of, I believe, minus 6%. There is now a growth rate in Cyprus of, I believe, 3% or maybe even over 3%. Our Cypriot colleague commemorated that before the crisis of course, the Cyprus was also at high growth figures, but then it was based on over expenditure on the public side and over-crediting in the banking sector. Now, it is solid growth and not based on risky economic developments. So, very strong and very good performance in Cyprus, on which, of course, we complimented the Cypriot authorities. The Cypriot government also reconfirmed its commitment to the reform effort. The time that they still have will be used to the max to work further on dealing with some of the remaining vulnerabilities in Cyprus, as in the financial sector, NPLs and any budgetary challenges.