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Eurogroup: ESM to be fully operational by the end of October

At the informal Eurogroup meeting in Nicosia, Cyprus, on 14 September 2012, the finance ministers discussed the economic and financial developments in the eurozone. The European Stability Mechanism (ESM) is expected to be up and running at the end of October 2012.


Press conference following the informal
Eurogroup meeting on 14 September 2012
Source: Cyprus Presidency of the EU Council 

ESM treaty ratification

The ministers welcomed the German Federal Constitutional Court's ruling allowing Germany to ratify the ESM treaty.

"We all agreed that no provision of the treaty may be interpreted as leading to higher payment obligations for ESM Members without prior agreements of their representatives," said President of the Eurogroup Jean-Claude Juncker. "We also agreed that the treaty provisions do not prevent comprehensive information of the national parliaments, as foreseen in national regulations."

The Eurogroup will issue a statement in the next few days to formalise this agreement.

The ESM Board of Governors is to hold its inaugural meeting in the margins of the next Eurogroup meeting on 8 October in Luxembourg.


Following some further technical preparations, the ESM will then be ready to finance new support programmes for eurozone countries where required.

Eurozone economic and financial situation

"Despite the difficult circumstances, the economic adjustment is taking place across euro area member states, which is a good sign for future growth," said Jean-Claude Juncker.

He considered the European Central Bank's independent decision to launch a new government-bond purchasing programme called Outright Monetary Transactions "an important element in the euro area's overall crisis response".

Spain

According to Mr Juncker, Spanish finance minister Luis de Guindos had reiterated "the full commitment of the Spanish authorities to meet their budgetary targets".  

The implementation of the assistance to the country's financial sector is on track, the Eurogroup President stated.

Greece

"We called on the Troika [European Commission, ECB, IMF] and Greece to continue their negotiations and agree on a set of credible measures to close the fiscal gap for 2013-2014," said Mr Juncker. He does not, however, expect political decisions before the second half of October.

Portugal and Ireland

The Eurogroup issued a statement welcoming the fact "that an agreement between the authorities and the Troika on revised fiscal targets has been reached".  The fifth review mission to Portugal, concluded on 11 September 2012, resulted in an extension of the timeline for the reduction of the country's budget deficit: it is expected to fall below 3% of GDP in 2014.  

The programme for Ireland is performing well. "Ireland, together with Portugal, is a living example that adjustment programmes do work provided there is a strong ownership and genuine commitment to reforms."


More information:
Eurogroup statement on Portugal, 14 September 2012 (pdf)
Eurogroup press conference video (Cyprus Presidency website)
Statement by the Eurogroup President following German ESM ruling, 12 September 2012 (pdf)
Eurozone portal
EC, ECB and IMF statement on the 5th review mission to Portugal, 11 September 2012 (Commission webpages)
 

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