20 January 2020

Main results - Eurogroup

In regular format, the Eurogroup discussed the euro area recommendation proposed by the European Commission. In inclusive format, ministers exchanged views on the organisation of the further work on the deepening of the Economic and Monetary Union (EMU).

IMF mission to the euro area

The International Monetary Fund (IMF) conducts an annual consultation on euro area policies. The IMF presented the main findings of its euro area Article IV interim mission to the euro area finance ministers.

Portugal: updated draft budgetary plan

The Eurogroup discussed the updated draft budgetary plan of Portugal for 2020, on the basis of a Commission opinion, and adopted a statement.

Eurogroup statement on the updated draft budgetary plan of Portugal for 2020 

Economic policy of the euro area

The Commission presented its proposal for the draft recommendation on the economic policy of euro area for 2020.

As part of the European Semester, in spring, the Council addresses annual recommendations on economic policy to the euro area. The recommendations will now be:

• further discussed in the Eurogroup
• approved by the Economic and Financial Affairs Council (Ecofin)
• formally adopted by the Council after endorsement in the March European Council

Policy priorities of the new governments of Spain, Austria and Finland

Minister Calviño, Minister Blümel and Minister Kulmuni presented the policy priorities of the new Spanish, Austrian and Finnish governments. This is standard practice in the Eurogroup when new governments come into office.

Inclusive format 

Deepening of the Economic and Monetary Union

Ministers exchanged views on the organisation of the further work on the deepening of the Economic and Monetary Union (EMU) in the next months, as a follow-up to the Euro Summit of 13 December 2019.

At the Euro Summit, leaders agreed that finance ministers should continue the work on the deepening of the EMU. In particular:

• the European Stability Mechanism (ESM) reforms
• solutions for the financing of the Budgetary Instrument for Convergence and Competitiveness (BICC)
• the way forward for the banking union

Full press release

Remarks by Mário Centeno following the Eurogroup meeting of 20 January 2020

[...]The economy is in the midst of a slowdown, but continues to grow. In fact, the length of the growth period and the number of jobs we have added are breaking all records. While risks remain tilted to the downside, some of the most urgent risks have abated slightly since the Fund last reported to us in June. In particular, some of the uncertainty surrounding Brexit and the risk of an outright global trade war has diminished.

The Fund also commented on policy priorities for the euro area – this links to another item of our agenda because today the Commission presented to us its proposals for recommendations on the economic policy of the euro area for 2020. We had an initial discussion on these priorities today.

Ministers highlighted a few issues such as green budgeting as a tool to support the climate transition; the need for growth-friendly policies, namely through a focus on digitalisation; financial integration; and the need to continue with euro area reform. We will debate these priorities in more detail in our February meeting.

Today the Commission also presented its assessment on the updated draft budgetary plan of Portugal. We have issued a statement recognising that Portugal has come a long way in recent years. It will record a fiscal surplus this year - that is an unprecedented development and remarkable vis-à-vis the crisis times. Also, the medium-term budgetary objective is well within reach and the debt rule continues to be respected. At the same time, the Commission opinion still identifies some risks in the horizon. Portugal confirmed its commitment to address them appropriately in the course of 2020.

We then exchanged views on the euro area ongoing reform, following-up on the Eurosummit.
Our main discussion concerned the work programme for the next 6 months.

As I reported to Leaders in December, the Eurogroup has already reached an agreement in principle on a revised ESM Treaty text and all the related elements of the ESM package of reforms, subject to national procedures. It is no longer a question of substance, but we need to tie up a few loose ends of legal nature before launching the process for signature. Legal checks and translations are still ongoing. This work should pave the way for the signature of the Amending Agreement of the ESM Treaty in the coming months.

We also discussed a possible timeline for a potential early introduction of the common backstop, ahead of the end of the transition period in 2024. This decision will depend on whether sufficient progress has been made in risk reduction, based on the assessment that will take place later this year. We will discuss this in our March meeting.

During the coming months, we will also continue to work on the issue of liquidity in resolution. We have asked our deputies to report to us by June 2020.

On strengthening the Banking Union, including EDIS, the Leaders invited us to continue the constructive work of the past months. Today we also confirmed the importance of the package approach to enable progress in all areas in parallel towards June.

 

On the budgetary instrument for convergence and competitiveness, Leaders gave us a mandate to provide a swift contribution on the appropriate solutions for its financing, in time for decisions in the context of the MFF. This is a priority for our work over the coming weeks. We are working on the basis of the term sheet we agreed last October. Our intention is to provide a report on the need, the content, the modalities and the size of a possible IGA. [...]

Full remarks

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