| ● Eurogroup | | | 05/12/2022 17:52 | Press release | | | | | We welcome the Commission’s Communication and its Opinions on the individual draft budgetary plans, published on 22 November. This exercise continues to be key to the coordination of fiscal policy in the euro area. We welcome that Croatia as a new euro area member from 1 January 2023 decided on a voluntary basis to submit a draft budgetary plan for 2023. The euro area economy continued its strong post-pandemic recovery in 2022, thanks to the swift policy action at national, EU and euro area level, and in spite of the economic impact of Russia’s war of aggression against Ukraine. At the same time, high energy price pressures, the erosion of households' purchasing power, a weaker external environment and tighter financing conditions are taking centre stage and heading into 2023, economic activity is decelerating. The euro area and most Member States are at the risk of experiencing a technical recession this winter, with growth projected to return in spring. As the economy adjusts to the rapid succession of two severe shocks, macroeconomic forecasts continue to be surrounded by large uncertainty. The labour market remains a source of resilience going forward, having benefitted also from short term work schemes, including those supported by the EU SURE mechanism, as well as the reforms and policies of the last decade. Based on the Commission forecast, the euro area deficit is projected to continue its decline in 2022 to 3.5% of GDP but is expected to widen in 2023 to 3.7% of GDP. Deficit levels vary significantly among Member States. The number of Member States with deficits above the 3% of GDP Treaty reference value is expected to increase from 10 to 12 between 2022 and 2023 based on the Commission forecast. Public debt in the euro area is expected to decline to 92% of GDP in 2023, decreasing gradually from the 2021 level but remaining well above the pre-COVID-19-crisis level. The euro area fiscal stance is projected to be clearly expansionary in 2022 and to be broadly neutral in 2023, according to the Commission, but would turn expansionary if additional energy support measures were to be enacted or current ones prolonged throughout 2023. Broad-based fiscal stimulus to aggregate demand in 2023 is not warranted, the focus being instead on protecting the vulnerable households and firms, while maintaining the agility to adjust to the rapidly evolving situation, if needed. We agree that fiscal policies should aim at preserving debt sustainability as well as raising the growth potential in a sustainable manner, thus also facilitating the task of monetary policy to ensure the timely return of inflation to the ECB’s 2% medium-term target. Given the urgent need to react to the energy price and inflation shock, we have taken emergency measures that could be easily and rapidly deployed. The direct budgetary cost of the measures in 2022 is estimated at 1.3% of GDP in the euro area. Many of these measures have been broad based and focused on energy prices, instead of targeted and addressing incomes. In 2023, the cost is projected at 0.9% of GDP in the euro area, and could increase significantly, if the already announced measures were to be kept in place for the full year. Going forward, as part of our response to mitigate the impact of high energy prices, we are working to ensure that measures are more efficient, better coordinated, while being fiscally affordable. We will in 2023 examine our measures to ensure that they are targeted and focused on vulnerable households and viable firms that are temporarily exposed. A well calibrated two-tier energy pricing model* and other schemes that achieve similar objectives, taking into account national features, could be explored. Equally, our measures should support further the reduction of energy dependence on Russia and accelerate the decarbonisation of the economy. This requires preserving the price signal to reduce energy consumption and incentivising investments in energy efficiency, futureproof energy infrastructure, including interconnections, storage and innovative renewable technologies. Given the strong spill-overs in energy markets and for the euro area economies, we will coordinate our measures to preserve the level playing field and the integrity of the single market. The Eurogroup agrees with the Commission’s assessment that all Member States should progressively withdraw such measures as energy price pressures diminish. In this regard many of the support measures currently in place are due to expire early next year. We will continue to coordinate our fiscal policy response in relation to energy support in the euro area and will further discuss a common approach for households, including reflecting on appropriate ways to wind down support, at our upcoming meetings, building on the Commission input and experience from euro area members. We recall that the fiscal guidance for 2023 included in the Council recommendation of 12 July 2022 differentiated between those Member States with high and low/medium debt levels, depending on their fiscal and economic situation. Member States with high debt levels should pursue a prudent fiscal policy, in particular by limiting nationally financed primary current expenditure growth. Low/medium debt Member States should aim at a neutral fiscal policy stance. According to the Commission assessment, most high debt Member States’ draft budgetary plans are in line with the fiscal guidance contained in the Council recommendation, the plan of Belgium is only partly in line, and the plan of Portugal risks being only partly in line with the Council recommendation, although we recognise the progress made on deficit and debt-reduction in Portugal. According to the Commission assessment, among the low/medium debt Member States, the draft budgetary plans of Austria, Lithuania, Germany, Estonia, Luxembourg, the Netherlands, Slovenia and Slovakia are only partly in line with the Council recommendation. The Eurogroup invites the Member States to take the necessary measures within the national budgetary process to ensure that the 2023 budget is consistent with the Council recommendations, taking into account economic circumstances. As the information on the energy support measures is a key driver of this year’s assessment, we welcome the Commission’s intention to closely monitor developments and provide an update to inform our upcoming discussions. We welcome that public investment expenditure has been on an upward trend in the large majority of Member States, helped in part by the Recovery and Resilience Facility and we recognise the need to further expand investment expenditure in 2023 and beyond, especially to support the green and digital transition, as well as energy security, including through RePowerEU, once adopted. Moreover, we acknowledge that there is a need to accelerate fiscal-structural reforms which would strengthen potential growth, competitiveness and debt sustainability. We take note that Italy’s no-policy-change draft budgetary plan was not assessed as part of this exercise. Italy submitted a full draft budgetary plan on 24 November 2022. We look forward to the Commission Opinion. The Eurogroup remains focused on the long term successful functioning of the Economic and Monetary Union. We welcome the publication of the Commission Communication on orientations for a reform of the EU economic governance framework of 9 November 2022. In cooperation with the Council Presidency and in the appropriate format, we will discuss euro area relevant aspects of the economic governance review. Swift progress on the review is a priority for enhancing economic policy coordination. In the meantime, we welcome the Commission’s intention to provide fiscal guidance in March 2023 for 2024; this will be a key input for our regular budgetary planning and coordination efforts. Credible, realistic, gradual and growth-friendly debt reduction remains key. The Eurogroup will continue to closely monitor economic developments and commits to further reinforce our coordination, in order to deliver a determined and agile policy response.
* Under a two-tier model, firms and households receive a basic package of energy services at a subsidised price with market prices applying for the energy consumption that exceeds this basic package. |
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| ● Eurogroup | | | 05/12/2022 21:10 | MEETING | | | | | The Eurogroup discussed the overall budgetary situation and prospects in the euro area, euro area recommendation for 2023, and the release of the final tranche of debt measures to Greece. The Eurogroup also re-elected Paschal Donohoe as its President. |
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Eurogroup
Eurogroup, 5 December 2022
Main results
Overall budgetary situation and prospects in the euro area
The Eurogroup discussed the overall budgetary situation and prospects in the euro area and reviewed the economic and fiscal situation of the euro area member states. This discussion was based on:Commission opinions on the draft budgetary plans (DBPs) of the euro area member states and
the Commission communication on its overall assessment of the DBPs (22 November 2022)
The Eurogroup issued a statement on the outcome of this discussion.
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.Paschal Donohoe, President of the Eurogroup
Eurogroup statement on draft budgetary plans for 2023, 5 December 2022Draft budgetary plans 2023 (European Comission)Euro area recommendations for 2023
Ministers exchanged initial views on the Commission recommendation for a Council recommendation on the economic policy in the euro area, published with the autumn package on 22 November. The recommendation will be agreed at the Eurogroup and Ecofin meetings on 16 and 17 January 2023 before being forwarded to the European Council for its meeting on 23 and 24 March 2023.
Recommendation for a Council Recommendation on the economic policy for the Euro area (European Commission)Reform of the economic governance framework
Ministers discussed euro area aspects of the Commission’s communication on orientations for a reform of the EU economic governance framework.
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.Paschal Donohoe, President of the Eurogroup
Commission communication on orientations for a reform of the EU economic governance framework (European Commission)Economic governance framework (background information)Post programme surveillance reports: Cyprus, Ireland, Portugal and Spain
Ministers discussed post-programme surveillance, and the institutions presented the main outcomes of the latest reports on four of the member states concerned. The IMF also took part in the discussions.
Post programme surveillance report - Cyprus, Autumn 2022 (European Commission)Post programme surveillance report - Ireland, Autumn 2022 (European Commission)Post programme surveillance report - Portugal, Autumn 2022 (European Commission)Post programme surveillance report - Spain, Autumn 2022 (European Commission)Greece: post programme surveillance report and policy contingent debt measures
The Eurogroup discussed the first post programme surveillance report on Greece. The Eurogroup concluded that the necessary conditions were in place to confirm the release of the eighth and final tranche of policy-contingent debt measures as well as the abolition of the step-up interest rate margin from 2023. The Eurogroup adopted a statement.
This is nothing less than a historic moment. The release of the final tranche of debt measures is an important milestone for the Greek government and for all of us. Greece financially stands on its own feet again and, as part of the European family, participates in our standard fiscal and economic EU coordination procedures.Paschal Donohoe, President of the Eurogroup
Eurogroup statement on Greece, 5 December 2022Election of the President of the Eurogroup
Ministers re-elected the incumbent President of the Eurogroup Paschal Donohoe for a second two-and-a-half year term, which will start from 13 January 2023.
It is a great honour to serve as President of the Eurogroup and I am grateful that my fellow ministers entrust me with chairing our discussions for a second term. I have been, and will continue to be, a genuine and honest broker in our negotiations, ensuring that all voices and positions are taken into account. Since autumn 2021, the Eurogroup has been at the forefront in both assessing and analysing the impact of higher energy prices and inflation on the euro area economy. Now that I am re-elected, my first priority will be to strengthen this coordination.Paschal Donohoe, President of the Eurogroup
Paschal Donohoe re-elected Eurogroup President (press release, 5 December 2022)Eurogroup work programme
The Eurogroup adopted its work programme for the first half of 2023.
Work programmeInclusive format:
Macroeconomic developments and prospects
Ministers exchanged views on the macroeconomic outlook and prospects, with a focus on the coordination efforts regarding the policy response to high energy prices and inflationary pressures.
Energy prices and security of supply (background information)Meeting information
Brussels
5 December 2022
15:30
Preparatory documents
Draft agenda, EurogroupDraft agenda, Eurogroup in inclusive formatDraft annotated agenda, EurogroupDraft agenda, Eurogroup in inclusive formatOutcome documents
List of participants, Eurogroup in inclusive format
| ● Eurogroup | | | 05/12/2022 20:57 | Statements and remarks | | | | | 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. |
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| ● Eurogroup | | | 05/12/2022 19:12 | Press release | | | | | Today, the Eurogroup discussed Greece’s progress with specific reform steps agreed between the European institutions and the Greek authorities to be completed by the autumn of this year, on the basis of the first post-programme surveillance report published on 22 November 2022, following the end of enhanced surveillance for Greece in August 2022. As agreed by the Eurogroup on 16 June 2022, this report also serves as a basis for a decision on the release of the final tranche of policy-contingent debt measures agreed in June 2018. The Eurogroup welcomes the further policy reforms achieved since the final enhanced surveillance report was published on 23 May 2022. In particular, we welcome the fulfilment of the specific commitments in the area of tax collection, cadastral mapping and forest maps, health care, insolvency and state-owned enterprises. Moreover, the Greek authorities have achieved a tangible acceleration in the clearance of arrears and backlogs, although further work is needed to clear legacy stocks as well as for the state guarantees clearance. Against this background, the Eurogroup welcomes the assessment by the European institutions that, despite the challenging circumstances due to Russia’s war of aggression against Ukraine, Greece has taken the necessary actions to complete its specific commitments and that the necessary conditions are in place to confirm the release of a final tranche of policy-contingent debt measures. Subject to the completion of national procedures, the Eurogroup Working Group and the Board of Directors of the European Financial Stability Facility (EFSF) are expected to approve the transfer of SMP-ANFA income equivalent amounts, the reduction to zero of the step-up interest margin on certain EFSF loans for the second half of 2022, and the reduction to zero of the step-up margin from 2023 onward. The global instability created by the war in Ukraine underscores the need to continue tackling decisively the existing medium-term risks and challenges identified in the first post-programme surveillance report, including the effective functioning of the non-performing loan secondary market, the primary health care reform, the codification of the labour legislation, ongoing reforms in the financial sector, the clearance of arrears, legacy backlogs of pending households insolvency cases and state guarantees, as well as the implementation of the Sale and Lease Back Organisation to ensure the full implementation of the insolvency framework. Moreover, the implementation of the reforms and investments of Greece’s Recovery and Resilience Plan will continue to provide an important impulse to the economy, as well as a strong catalyst for efforts towards the green and digital transition. We welcome the commitment of the Greek authorities to continue the reform process, and in particular their willingness to swiftly ensure the smooth functioning of the secondary market for non-performing loans, and in this regard, we look forward to the second post-programme surveillance report, which is expected to be published in spring 2023. Going forward, the continued implementation of an ambitious growth strategy and of prudent fiscal policies will continue to be the key ingredients for debt sustainability. The implementation of specific reform commitments as well as the release of the final tranche of policy-contingent debt-measures, as agreed today, marks the end of the regular Eurogroup discussions on policy-contingent debt measures as of June 2018. |
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| ● Eurogroup | | | 05/12/2022 18:53 | Press release | | | | | The Eurogroup today re-elected by consensus Paschal Donohoe, Minister for Finance of Ireland, as President of the Eurogroup, for a second term of two and a half years that will start from 13 January 2023. "It is a great honour to serve as President of the Eurogroup and I am grateful that my fellow ministers entrust me with chairing our discussions for a second term. I have been, and will continue to be, a genuine and honest broker in our negotiations, ensuring that all voices and positions are taken into account. Since autumn 2021, the Eurogroup has been at the forefront in both assessing and analysing the impact of higher energy prices and inflation on the euro area economy. Now that I am re-elected, my first priority will be to strengthen this coordination."
Paschal Donohoe, President of the Eurogroup |
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Eurogroup
Press release
5 December 2022
18:50
Paschal Donohoe re-elected Eurogroup President
The Eurogroup today re-elected by consensus Paschal Donohoe, Minister for Finance of Ireland, as President of the Eurogroup, for a second term of two and a half years that will start from 13 January 2023.
It is a great honour to serve as President of the Eurogroup and I am grateful that my fellow ministers entrust me with chairing our discussions for a second term. I have been, and will continue to be, a genuine and honest broker in our negotiations, ensuring that all voices and positions are taken into account. Since autumn 2021, the Eurogroup has been at the forefront in both assessing and analysing the impact of higher energy prices and inflation on the euro area economy. Now that I am re-elected, my first priority will be to strengthen this coordination.Paschal Donohoe, President of the Eurogroup
Paschal Donohoe
The President has been in office since 13 July 2020.
The Eurogroup is an informal body where ministers of euro area member states discuss matters of common concern in relation to sharing the euro as the single currency. It focuses on the close coordination of economic policies. It usually meets once a month, on the eve of the Economic and Financial Affairs Council meeting.
The first Eurogroup meeting took place on 4 June 1998 in Luxembourg. The first President of the Eurogroup was Jean-Claude Juncker. He was succeeded by Jeroen Dijsselbloem, Mário Centeno and Paschal Donohoe.
Biography of Paschal DonohoeEurogroup Presidency: incumbent Paschal Donohoe is the only minister to put forward his candidacy (press release, 24 November 2022)List of members of the EurogroupEU Treaty - Protocol 14 on the EurogroupEurogroup (background information)
