Remarks by Jeroen Dijsselbloem at the press conference following the Eurogroup meeting of 16 February 2015
Eurogroup President Spokesperson
Good evening everyone and thanks for joining this press conference after the Eurogroup meeting. I will make a few remarks about other topics before turning to Greece, which I understand will also be your main point of interest tonight.
We discussed the request by Portugal to get away to allow them to pay off some of the IMF loans first of all, and I am happy to tell you that the Eurogroup has lent its support in principle to Portugal's plan to repay the IMF loans early by refinancing at current low interest rates, Portugal can make significant savings on debt service. This will off course help with Portugal's debt sustainability.
Like Ireland, which recently started its own early repayments to the IMF, Portugal is demonstrating how quickly a country can be back on its own two feet after a successful adjustment program, provided ownership and commitment to ongoing reforms.
Of course this subject will also be discussed tomorrow in the ECOFIN Council given the involvement of the IFSM and then national procedures can start, but we hope to conclude this decision making process in the time of a month.
On Cyprus, we took stock of the state of play of the program. The foreclosure framework is the hurdle right now. This framework is needed to let banks clean their balance sheets and get back to their core business of lending money to the economy, given the very high ratio of non-performing loans. So this is an important element in the economic recovery program for Cyprus.
If and only if this hurdle can be overcome, the program can be brought back on track. This is why we call on all involved Cypriot decision-makers to implement this framework as soon as possible.
Economic situation and other euro area topics
We also took stock of the economic situation in the Euro zone on the basis of the winter forecast. Possibly the Commissioner will debrief more on that.
I debriefed my colleagues on last Thursday's informal European Council where we discussed the state of the monetary union in preparing working towards the 4 presidents report which is now planed for June. Finally, we had a discussion on the international role of the euro. This was an issue that was brought up by our French colleague some months ago and now was prepared by the Commission. The euro remains important as a reserve currency, as a trade currency and as a parallel currency in neighbouring countries. At the same time, some euro area firms face extra costs when they trade in markets that use other currencies. This issue was recognized by all and even though we all agreed that the international role of the euro was and should be mostly market-driven, one can look and we will look more in depth on the reasons and possible obstacles for using the euro in international trade in specific sectors. We've asked the Commission and the euro working group to look into this specific issue in more detail and then we will come back to it in the second half of this year.
Then turning to the Greece, as you remember the outcome of the last Eurogroup was that in the end we did not agree on the way forward. We have been drafting the statement but we couldn't finalize, we did not get the final agreement on that.
The day after I spoke to Prime Minister Tsipras and together with him we've agreed to ask the institutions to at least start the technical work, the technical assessment of where are we in the current program, what are the elements that the new government could agree to. There was an assumption of 70/30 - they could possibly agree to 70% but not to 30% - so we asked the institutions to look at that assumption and then to look at possible replacement measures that which would come from the new Greek government's plans to fill in the 30.
Today we were reported back to us by the institutions how all these talks which took place on Friday and Saturday. In general the reaction of the ministers of the Eurogroup with a slice of disappointment on the outcome of those talks. Much appreciation to the people who did the work over the course of the weekend. Disappointment over the fact that there was still no firm common ground on what such an adjustment in the program could look like and how much of the program would actually be carried forward by the new Greek government.
The last couple of days right up till the start of the meeting we also talked with Greek colleagues to see whether we could find adjustments in statements on further steps and we were unable to do so at the start of the meeting.
In the meeting, after we have been informed by the institutions on the state of play in the program and the 70/30 assumption, we had a round of debates on the steps forward. The general feeling in the Eurogroup is still that the best way forward for the Greek authorities would be to seek an extension of the program.
The main reason for that is that given the ongoing discussions about how the program should work and the future arrangement for Greece should look like, we simply need more time and the best way for that is to at this point to extent the current program which would then allow us a number of time, a number of months to work on future arrangements.
Such an extension would allow for the Greeks to use the normal kind of flexibility in the program. Talking to the institutions it would be possible to change measures, put other measures into place, but there would also have to be other safeguards and commitments. The request for extension would have to be accompanied by a number of commitments. Let me just mention the key elements here:
- yes, there is a flexibility in the program; we are open to discuss the replacing measures, but not by taking unilateral actions;
- a request to come with the commitment not to roll back any measures, unless agreed with the institutions and unless fully funded;
- a request should come with an unequivocal commitment from Greece to honour all financial obligations to its creditors and off course to assure stability in the financial sector;
- on the basis of such an extended program, within which flexibility is possible should be also the commitment for the Greek authorities to successfully conclude the program. We should have the reassurance that that is the intention;
- any request should be on the basis of the commitment to work closely and to continue the dialogue with the institutions and the Eurogroup.
On this basis, we stand ready to continue our discussions. It is now up to the Greek authorities to decide whether they would want such an extension, whether they would take up the offer to look for the flexibility within the program, but also to give of the kind of commitments that I've just mentioned which are very important to all members of the Eurogroup.
There was a very strong opinion across the whole Eurogroup, that the next step has to come from the Greek authorities. They have to make up their mind to whether they will ask for an extension in the current program, as I said - using the flexibility and at the same time giving of the main commitments.
In terms of process, giving the timelines that we have and parliamentary deadlines, I think we can use this week, but that is about it. If the request for an extension would come in, we would of course look at it, ask the institutions to review it and advise us and then we could have, if a positive outcome can be envisaged, the extra Eurogroup of Friday, but that is for the later moment to decide. That is where we stand for now.