European Commission: Speaking points of Commissioner Moscovici at the joint College read-out with Vice-President Katainen

22 July 2015

Developments regarding Greece and communication on the role of National Promotional banks in supporting the Investment Plan for Europe.

Regarding Greece now, here is an overview of where we stand.

In the past ten days, all parties have delivered on their commitments.

We are making swift progress toward effective implementation of the euro summit agreement:

• The Greek Parliament adopted last week a first substantial package of reforms, in line with the euro summit agreement. This was an important step towards rebuilding trust with Greece's international partners.
• Several national parliaments approved the agreement, including in Finland, Germany and Slovenia.
• The European Central Bank (ECB) decided on July 17th to raise its assistance ceiling by 900 million euros. The new limit applies for one week. Greek banks were able to reopen on Monday, which is a very important event.
• The Commission’s proposal for bridge financing for Greece under the European Financial Stabilisation Mechanism (EFSM) was approved by Member States on Friday 17 July. This short-term financial assistance aimed at ensuring that Greece's urgent financing needs were covered. Under the EFSM, the Commission borrows on financial markets on behalf of the Union under an EU budget guarantee. The Commission then lends on the proceeds to the beneficiary Member State which is experiencing, or is seriously threatened with, a severe economic or financial disturbance caused by exceptional occurrences beyond its control.
• On Friday the European Commission also revealed a plan to help the country maximise its use of EU funds. The plan will help mobilise more than €35 billion up to 2020 to support the Greek economy and give the proposed reforms the best chance to work.
• A disbursement of 7.16 bn EUR was made on Monday to Greece under the EFSM.
• Following this disbursement, Greece was able to make the €3.5 bn payment to the ECB on Monday. It also cleared the totality of its arrears to the IMF on the same day, equivalent to about €2bn. In practice, this means that Greece may now receive loans from the fund. And that also means that Greece is no more in any kind of default either to the ECB or to the IMF, I think these are very, very important steps forward.

 

The European Commission was instrumental in designing a solution to ensure that Greece's urgent financing needs were met, via the EFSM bridge-financing. This was a question raised by President Juncker during the Eurozone Summit that had to be addressed in a very efficient manner.

Several options were on the table. However it was the view of the Commission that the EFSM was the best of them.

The EFSM is ultimately backed by the EU budget and is a mechanism for the 28 Member States. Intensive contacts with Member States allowed us to identify and address concerns regarding the use of the mechanism especially for countries outside the Eurozone which expressed their legitimate concerns. All countries then took a constructive approach which helped us to reach an agreement.

In order to ensure that non-euro area Member States would not be liable for any potential losses arising from the loan, the euro area countries agreed to put in place a system of collateral for non-euro area Member States, designed to protect them. This system ensures that in all circumstances the non-euro area Member States are protected and cannot suffer any losses as of the EFSM loan to Greece.

The Commission has been invited to make this system permanent, in case of future use of the EFSM, because there is still some money left in the EFSM, around €6bn. This is why we have adopted this morning a revised Regulation of the EFSM, introducing these collateral guarantees as a principle. The Member States will have to discuss and agree on this in the days to come.

 

One last word on the next steps:

• On 17 July, the ESM Board of Governors took the formal step to entrust the institutions with negotiating a Memorandum of Understanding (MoU) detailing the policy conditionality attached to the three-year stability support to Greece under the ESM which the Greek government was asked for. The negotiations on the MoU have just started and will lead us to the second fortnight of August.
• It is expected that the Greek Parliament will vote today on the second set of legislative measures agreed in the eurozone Statement. Experts of the three institutions are supporting the Greek authorities in the elaboration of the measures – we are, I am, in daily contact with the Greek government. I have spoken ten times since Monday with Minister Tsakalotos, because there are adjustments that need to be made and again commitments from both sides have to be respected, our line is exactly what has been decided by the Eurozone Summit. This package will include the adoption of the Code of Civil Procedure, and the transposition of the Bank Recovery and Resolution Directive (BRRD). I am confident these measures will be adopted tonight.

That is where we stand at the moment. After months of deadlock, we are now making swift progress on the implementation of the euro summit agreement.

Full speech

© European Commission