The Eurogroup finalised its discussion on the ongoing second review of Greece's macroeconomic adjustment programme financed by the European Stability Mechanism.
The Eurogroup welcomed the adoption of the agreed prior actions by Greece's parliament. They were part of the set of policy reforms the country had agreed with the institutions (European Commission, European Central Bank, European Stability Mechanism and the International Monetary Fund) on 2 May 2017.
The reform measures cover areas such as pensions, income tax, the labour market as well as the financial and energy sectors. These should make Greece's medium-term fiscal strategy more robust and support the growth-friendly rebalancing of the economy.
The Eurogroup invited Greece together with the institutions and relevant third parties to develop and support a holistic, growth enhancing strategy.
The Eurogroup reconfirmed its approach to the sustainability of Greece's public debt that was agreed in May 2016, while providing some further detail on the medium-term debt measures that could accrue to Greece.
These measures would be implemented after successful completion of the programme, if a new debt sustainability analysis were to confirm that such measures are necessary.
The Eurogroup welcomed Greece's commitment to maintain a primary surplus of 3.5% of GDP until 2022, and a fiscal path consistent with the European fiscal framework thereafter. According to analysis by the European Commission, such compliance would be achieved with a primary surplus of equal to or above but close to 2.0% of GDP in the period of 2023-2060.
Against this background, IMF management will shortly recommend that the IMF Executive Board approve in principle a new, 14-month Standby Arrangement for Greece.
The European Stability Mechanism will be able to proceed with the next tranche of financial assistance to Greece available under the programme after the euro area member states have completed their relevant national procedures authorising the disbursement. The next tranche will amount to €8.5bn.
Thematic discussion on growth and jobs: improving the quality of public finances
The Eurogroup had a further exchange of views on the quality of public finances, following up on its September 2016 discussion when it endorsed common principles to guide national spending reviews.
Ministers discussed the practical implementation of these principles, against the backdrop of a presentation by the European Commission on country experiences.
Spending reviews help governments detect areas where savings and efficiency gains could be made and where spending could bring greater value for money. This topic is particularly relevant to euro area member states given their current efforts to ensure fiscal responsibility and at the same time support growth.
Further work will be carried out in this area, with a view to developing an exchange of best practices.
IMF Article IV review of the euro area
The Managing Director of the International Monetary Fund (IMF), Christine Lagarde, informed the Eurogroup about the Fund's assessment of the euro area's economic outlook, risks and policy challenges. The assessment was carried out in the context of the IMF's annual Article IV consultation.
The IMF confirmed that economic recovery in the euro area is strengthening and becoming more broad-based across member states. It recommended that the euro area take advantage of the current favourable financing conditions and continue to focus on sound fiscal policies and structural and financial sector reforms. The completion of the Economic and Monetary Union should also be pursued.
The Eurogroup had a constructive discussion on this assessment. The IMF's concluding statement will be available on its website in due course.
Article IV of the IMF's Articles of Agreement is the basis for the IMF's surveillance of the economic policies of its member countries and currency regions such as the euro area.
Implementation of the European resolution framework
The Eurogroup was informed by the Chair of the Single Resolution Board, Elke König, and the Vice-Chair of the ECB Supervisory Board, Sabine Lautenschläger, together with the European Commission, of recent topical developments regarding the implementation of the European resolution framework.