Friday, April 27, 2018

EU Economy - Greece - The Eurogroup took note of the so-called 'enhanced surveillance', as proposed by the Commission...

Press Release - 27/04/2018 - Remarks by M. Centeno following the Eurogroup meeting of 27 April 2018

Good afternoon. - Before we start, I would like to warmly thank the Bulgarian Presidency for hosting the Eurogroup here in Sofia.

Today we welcomed the new German finance minister, Olaf Scholz. This was his first Eurogroup meeting. He presented the policy priorities of the new German government. We wished him all the best. Olaf is a true European and I am convinced he will carry forward Germany’s important contribution to a more robust euro area.

On Greece, we had a productive discussion. We saw some good news from Greece lately, namely on the fiscal side. For the second consecutive year, Greece delivered a primary surplus over 4% of GDP and a budget surplus. This is very encouraging given the track record. On the programme, Greece remains fully committed to the reform agenda. We got good feedback from the institutions regarding the implementation of the fourth and final review of the programme. I’m happy to announce that the institutions will return to Athens on the 14th May for their next mission. This is good news. Ahead of the May Eurogroup, the institutions and the Greek authorities will work towards an agreement on all policies that need to be implemented for the final review - the so-called staff level agreement. With the programme well on track and approaching the end, we are already preparing the post-programme period. Today, the Greek Minister presented the growth strategy of Greece for the coming years. The strategy is to boost Greece's long-term growth potential and enhance the investment climate. Importantly, it underlines Greek ownership of the reform process beyond the end of the ESM programme. This exercise is key for the future of Greece. On the back of our experience in other programme countries - namely in the country I know best - ownership is critical for the sustainability of the current economic recovery in Greece. Lastly, we also addressed the post-programme legal framework to prepare for a successful exit from the programme this summer. The final decision on the implementation of the debt measures will be taken, if needed, at the end of the programme, conditional on full implementation of the programme, of course. We also discussed how we can further support the Greek authorities in their continued reform efforts in the years after the programme. We took note of the intention of the Greek government not to request a successor arrangement. On the future monitoring of the economic, fiscal and financial developments, the Eurogroup took note of the so-called 'enhanced surveillance', as proposed by the Commission. We will now continue discussions on these issues in the weeks ahead, also on the debt strategy. On the basis of a successful review, the Eurogroup will decide in June all the elements that can help facilitate the exit of Greece from the programme by August.

Today, we also held our regular hearing of the ECB Banking Supervision Chair and we were debriefed by the Chair of the Single Resolution Board. Both provided a timely update covering their current activities and recent developments in the sector. They also highlighted challenges and priorities for 2018 and beyond. We welcomed that the banking sector has gained in resilience and continues to reduce risks. Some legacy issues still remain in banks' balance sheets. The work on non-performing loans is going in the right direction to address those legacies and to prevent the build-up of potential future problems.

In addition, we discussed Anti-Money laundering issues, and we will continue discussions on technical level on how to strengthen coordination between supervisors. We commended both Chairs for their excellent work to-date and encouraged them and the Commission to continue working together closely. We look forward to our next rendez-vous in November. 

We also discussed wage dynamics in Economic and Monetary Union (EMU). This is part of our regular thematic discussions on growth and jobs. We benefited from a rich presentation from our distinguished guest today– professor Tito Boeri, President of the Italian Social Security Institute. Wages are an important variable for macroeconomic adjustment in the monetary union. The issue has a strong national and in some cases sectoral dimension and the role of the social partners in wage setting is fully acknowledged. Moreover wage developments take place in a context that is affected by globalisation and technological change. Nevertheless, there is a range of possible supporting policies to help bringing wages and productivity developments more in line. These include reforms to reduce segmentation of labour markets, promote mobility and to take into account technological progress and digitalisation of the economy. We will continue our exchanges on labour market issues at our meeting in June. 

Let me also report that this morning the Commission and the European Stability Mechanism (ESM) jointly announced that they are signing a Memorandum of Understanding (MoU) on their working relationship in the context of ESM financial assistance programmes. This is excellent news. All Euro finance ministers encouraged both institutions in this process. The Commission’s and the ESM’s responsibilities are, to a large extent, complementary. It is good that this successful cooperation between European Commission and ESM on the ground has now been formally codified. It goes to show that when we work together we combine our strengths, making the euro area more resilient and in this case re-enforcing both institutions.

Finally, we welcomed that the updated draft budgetary plan of Austria is broadly compliant with the Stability and Growth Pact (SGP). Austria submitted an update because of the timing of national elections and the Eurogroup already issued a statement a few days ago, in time for Austrian parliamentary procedures.

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