The Eurogroup today took stock of the situation regarding the programme of Greece. It is regrettable to say that too little progress has been made in the talks between the institutions and Greece, that there is no agreement yet is in sight.
Let me recall that at the basis on which we work is the agreement of the Eurogroup of 20th February and the statement that we agreed upon then. In that agreement, there were two kinds of flexibility. First, we said we would allow the institutions to take into account the current economic situation in Greece and if necessary, adjust the fiscal targets and timelines considering the deterioration of the economic situation in Greece.
The second flexibility which we allowed was to replace measures, both fiscal measures and reforms, by other measures being put forward by the Greeks after having been being assessed by the institutions. So there was also flexibility within the current MoU to replace measures.
The institutions have made used of those two kinds of flexibilities during their talks with the Greek authorities. But as we stand now, too few measures that have been put forward and assessed are credible and serious and are to be put in a new agreement. Therefore, the talks of the last weeks have not progressed.
Today in our meeting, we sent a strong signal to the Greek authorities that it's really up to them to submit new, additional proposals in the coming days to fully engage with the institutions, within the framework of the Eurogroup statement of 20th February.
As of today, it is still possible to find an agreement and extend the current programme before the end of this month. But the ball is clearly in the Greek court to seize that last opportunity. We feel that an agreement must be credible. It has to be credible from the perspective of sustainable finances and economic recovery in Greece. But also it has to be credible from the point of view of the credibility of our monetary union and the eurozone as a whole. We think that it is still possible, but if such an agreement is sent to the Eurogroup in the coming days we will judge it on that: the credibility both of Greece and for the eurozone as a whole.
Finally, let me again stress that time is really running out. The current programme expires by the end of this month. There are of course parliamentary procedures to consider. Therefore, very little time remains.
Cyprus and Portugal
We welcomed that the Cyprus programme has been brought back on track, and the prior actions have been complied with. As we have adopted a statement which will be distributed, I do not need to go into great detail. Let me just emphasise that we welcomed the progress and reforms in the financial sector, including the new foreclosure framework, which is an essential step towards addressing the very high level of non-performing loans in the financial sector.
Important challenges remain for the remainder of the Cypriot programme, notably to reduce the stock of arrears. This must remain a key priority.
Given the overall positive picture, we endorsed in principle the updated MoU and the next ESM disbursement. National parliamentary procedures are now underway.
We also reviewed the situation in Portugal on the basis of a debrief by the institutions on the main findings of their second post-programme surveillance mission. The IMF participated and they call it 'post-programme monitoring'. The ESM also participated and the name is the 'early warning surveillance'. We welcomed the progress made and the expected strengthening of the economic recovery in Portugal. At the same time, fiscal and structural challenges remain, but we are confident that Portuguese efforts will be maintained.
The developments in Portugal and Cyprus, taken together with our discussions earlier this year on post-programme surveillance in Spain and Ireland, demonstrate a clear pattern of countries taking the necessary measures to turn around their economies and sparking growth. I think the success of the programme has been proven in all of these countries.
Euro area economy
To start off, Christine Lagarde debriefed us on the IMF's recently concluded Article IV review of the euro area. The IMF sees, as we do, a strengthening of the cyclical recovery underway, but this is for a large part driven by temporary factors, so we need to keep focusing on ways to increase our growth potential and to push forward structural reforms that are needed in that sense.
There is broad agreement within the Eurogroup on the policy priorities identified by the Fund, namely structural reforms, appropriate fiscal policies and making sure the financial sector can fund economies. In particular, one of the messages of the Fund is to use wisely yields-savings stemming from unusual low interest rates. We had a discussion on this topic, prepared by the Commission, and agreed that low interest rates open up a window of opportunity to consolidate public finances; invest, for example, in infrastructure; and reform our economies. It is an opportunity that we must use well. We will return to this topic later in the year.
There is substantial overlap between the Fund's priorities for the eurozone and the draft 2015 euro area recommendations proposed by the Commission - which is part of the European Semester. We endorsed these draft recommendations and we are committed to monitoring their implementation over the coming years so they will be put into our working programme in the Eurogroup. We must keep the reform momentum, and the Eurogroup intends to keep on pushing on concrete progress and greater ownership in this area.
Full press release
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