Thank you and good afternoon. First of all, let me thank the Romanian Presidency for hosting us here in Bucharest - a great hospitality.
Our meeting today was attended by a number of guests, including from the European Parliament, the SSM, the SRB, and the IMF. This reflects the wide range of important matters we are discussing. It also reflects my desire to reach out to key stakeholders in the Eurogroup's policy debates, and this is all about openness.
We started by welcoming Roberto Gualtieri, the Chair of the European Parliament's ECON Committee. We exchanged views with him on the euro area's economic outlook and challenges. This was not the first time Roberto has been our guest in the Eurogroup. This exchange of views is valuable for both of us, as was noted by several ministers, and will continue.
We then welcomed Andrea Enria and Elke König. Our hearing with the ECB Banking Supervision Chair is customary by now, but this was the first time for Andrea, in his new role. Elke debriefed us on the SRB's ongoing activities and challenges.
We welcomed the increased resolvability and resilience of banks. We also welcomed the recent improvements to the EU anti-money laundering framework. Fighting money laundering and terrorist financing remains a top priority for the EU.
We encouraged both chairs to continue working together closely and we look forward to our next rendez-vous in November.
Next, we took stock of inflation and exchange rate developments based on the Commission and ECB assessments, which are broadly aligned. We do this in order to take a consistent message into G7, G20 and IMF meetings, which are approaching. Exchange rates have followed macroeconomic and policy developments. Regarding inflation, there is more of a question mark. In spite of policy support and labour market trends, pick-up in inflation has long been expected but not yet materialised.
Next, we discussed the Commission Opinion on the updated draft budgetary plan submitted by Luxembourg's new government. We welcome that it complies with the requirement of the preventive arm of the stability and growth pact.
On Greece, we discussed the implementation of the reform commitments based on the updated report on enhanced surveillance. This report is positive as it concludes that, at this stage, Greece has taken the necessary actions to deliver on its commitments.
We welcomed the adoption of the budget for 2019 in line with the commitments made under the programme and the completion of important structural reforms. We took note of the commitment of the Greek authorities to ensure that their newly-legislated scheme for the protection of primary residences is temporary and will be terminated by the end of 2019. We asked the institutions to monitor its fiscal and financial implications.
We encouraged the Greek authorities to continue the implementation of all key reforms adopted under the ESM programme.
Finally, on the basis of this assessment by the European institutions, we now expect the EWG and the EFSF Board of Directors to approve the two so-called policy contingent debt relief measures. This approval is subject to the completion of national procedures, which will now begin. These debt measures concern the transfer to Greece of profits made by the central banks on Greek government bonds (the so-called SMP and ANFA) and the reduction to zero of the step-up interest margin on certain EFSF loans. In cash this adds up to a grant of € 970 million Euros. It also sends investors a positive signal of continued ownership of the reform agenda in Greece, and you can see this already going on in the markets today.
Later on we welcomed the non-euro area members in the room to continue our discussions on deepening our economic and monetary union. Today we dealt with two main work streams – the Budgetary Instrument for Competitiveness and Convergence and EDIS.
On the budgetary instrument, last month we discussed expenditure. Today we discussed governance aspects and in May, our next meeting, we will discuss revenues. We should be ready to put all these elements together in time for the June summit.
Governance is critical. It’s about how we will run this tool, it is a political issue that also includes a technical and a legal dimension.
The 19 euro area Member States will have a strategic guidance role in this tool, but it will stay in the context of the MFF, the EU budget framework. The governance needs to reflect this complexity.
There is broad support on making appropriate links between the budgetary instrument and the European Semester, in particular via the euro area recommendations.
There is also broad support to codify this strategic guidance role for the euro area members. We will need to define the best legal way to do it. Some prefer an Inter-Governmental Agreement, others prefer to develop legal arrangements within the EU law. We will come back to this issue next month when we discuss revenues.
We aim to agree on the features of the new instrument and be able to report to the June summit.
Our last agenda point was on the European Deposit Insurance Scheme – also known asEDIS. The Chair of the High Level Working Group on EDIS informed us about the good progress in their discussions.
What we have asked this group to deliver is a credible path that can lead us to a fully functional Banking Union, which will include an efficient European depositor protection. There is more work to be done until our June deadline.
Finally, a gathering of euro area finance ministers on this date cannot ignore the developments regarding Brexit. We took stock of our level of preparedness. Leaders will discuss Brexit in the Special European Council on 10 April.
On our side, we prepared for all possible scenarios. This includes, of course, a “no-deal” Brexit. We have taken the necessary contingency measures and insisted on preparedness by market participants. Member States have prepared national contingency measures in financial services. Overall, European and national contingency measures cover all systemic activities in order to avoid cliff-edge effects. Nevertheless, such measures can neither replicate the benefit of EU membership nor compensate any lack of private players’ preparation. And, needless to say, we will want to avoid this scenario. Thank you.
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Eurogroup statement on the updated draft budgetary plan of Luxembourg for 2019
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The Eurogroup welcomes Luxembourg’s submission of an updated draft budgetary plan (DBP) for 2019, as requested in its statement of 4 December 2018, as well as the Commission opinion issued on 22 March 2019.
The Eurogroup welcomes that Luxembourg’s plans are deemed to be compliant with the requirements of the preventive arm of the Stability and Growth Pact (SGP) in 2019. Luxembourg has outperformed its medium term objective and has used its favourable budgetary situation to sustain investment and growth.
We will continue to monitor euro area member states' fiscal and economic policies, as well as the budgetary situation of the euro area as a whole.
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Eurogroup statement on Greece of 5 April 2019
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The Eurogroup discussed the implementation of the reform commitments by Greece based on the enhanced surveillance report of 27 February and the update published on 3 April.
We welcome the adoption of a budget for 2019 which is projected to ensure the achievement of the primary surplus target of 3,5% of GDP, and the completion of important structural reforms including key privatisation transactions.
The Greek authorities have legislated a new scheme for the protection of primary residences, which has the potential to support banks in resolving mortgage NPLs. We take note of the commitment of Greek authorities to ensure that the scheme is temporary and will be terminated by end 2019. We ask the institutions to monitor - in the context of enhanced surveillance - carefully the impact of the scheme on the banks’ capital and lending, the impact on enforcement and litigation, its impact on the process of NPL reduction, the impact on efforts to reduce the backlog of pending household insolvency cases and the fiscal implications of the scheme. We welcome the commitment of the Greek authorities to harmonize and improve in the coming months in a holistic fashion the bankruptcy and insolvency regimes.
Furthermore, we take note of the medium-term risks and challenges identified in the enhanced surveillance report. Against this background, we welcome that the Greek authorities reiterated their general commitment to continue the implementation of all key reforms adopted under the ESM programme, especially as regards the income tax reform broadening the tax base and other tax reforms to ensure growth friendly measures and targeted social programmes, the reduction of arrears to zero, the collection of taxes and social security contributions, recruitments in the public sector, privatisations, as well as labour market reforms. It will also be crucial to continue with the implementation of financial sector reforms, to ensure, inter alia, an effective framework for e-auctions, the implementation of the action plan on household insolvency with the objective to eliminate the backlog of cases by end-2021 and improvements in the management of loan guarantees. These will continue to be monitored in the context of enhanced surveillance. The Greek authorities are invited to closely monitor wage developments during 2019 and to analyze the effects of the recent increase of the minimum wage and changes in collective bargaining on employment and competitiveness.
Against this background, the Eurogroup welcomes the assessment by the European institutions that Greece has taken the necessary actions to achieve all specific reform commitments for end-2018 and that the necessary conditions are in place to confirm the release of the first tranche of policy-contingent debt measures. Subject to the completion of national procedures, the EWG and the EFSF Board of Directors are expected to approve the transfer of SMP-ANFA income equivalent amounts and the reduction to zero of the step-up interest margin on certain EFSF loans worth EUR 970 mln in total.
We continue to monitor closely the ongoing legal proceedings against the members of the Committee of Experts (CoEx) of TAIPED and the former President and senior staff of ELSTAT.
Our next discussion on Greece will be based on the next enhanced surveillance report expected to be issued in June.
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