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Eurogroup: overview of the situation in the eurozone

At the Eurogroup meeting in Luxembourg on 21 June 2012 finance ministers discussed the latest developments in the eurozone, mainly in Greece, Spain, Portugal and Ireland.


Christine Lagarde, Managing Director of the IMF,
and Jean-Claude Juncker
© European Union, 2012

Greece: troika missions resuming

At the meeting, the Greek caretaker Finance Minister George Zanias expressed the Greek Prime Minister's and the new governing coalition's determination to honour Greece's commitments with regard to the European Union and the euro area. The Greek government is expected to invite the troika (European Commission, European Central Bank, International Monetary Fund) to Athens next Monday to take stock of the situation. On the basis of this guidance, "a full troika mission will go to Athens with a view to reaching agreement on the conditionality that should be reflected in an updated Memorandum of Understanding," said President of the Eurogroup Jean-Claude Juncker.

Spain: formal request for assistance expected

The ministers were briefed by the Spanish Finance Minister Luis de Guindos on the results of two independent evaluations of the Spanish banking sector, which are showing recapitalisation needs in the adverse scenario in the range of 51 to 62 billion euros. "We would expect the Spanish authorities to put forward a formal request for financial assistance by next Monday," said Mr Juncker. "Following that request, we will give a mandate to the Commission in liaison with the ECB and the European Banking Authority to negotiate a Memorandum of Understanding relating to financial assistance." The exact amount of money will be known by the end of these negotiations.

The Eurogroup President said: "We concurred that financial assistance would be provided by the European Financial Stability Facility (EFSF) until the European Stability Mechanism (ESM) becomes available. Then it will be transferred to the ESM. If the ESM is in force in time, we will immediately start by using the instrument of the ESM."

Portugal and Ireland: good results

The recent troika review mission to Portugal concluded that the Portuguese programme remains on track and that the authorities are committed to its implementation. The EU has provided 35 billion euros worth of financial assistance to this country, with a further 2.7 billion euros to be disbursed following the next review in September.

Jean-Claude Juncker commended Ireland for "the continued steadfast implementation and strong ownership of its adjustment programme". Growth returned last year and the deficit of 9.4% was well below the programme target of 10.6%. The EU has so far provided 32 billion euros of financial assistance to Ireland and a further 2.8 billion euros will be paid following the next review mission in July.

"The Portuguese and the Irish programme implementation is showing that we are moving in the right direction thanks to the efforts of both governments and both peoples," said Mr Juncker.

ESM Treaty: ratification progresses well

Jean-Claude Juncker stated that the ESM Treaty ratification process was progressing well, with parliamentary approval already obtained in eight member states.

IMF review of the euro area

The meeting was also attended by Christine Lagarde, the Managing Director of the IMF, who presented the main findings of her institution in the framework of the annual Article IV review of the euro area.

Links:
Eurogroup press conference videos
Eurozone portal
Eurogroup statement on Greece, 17 June 2012 (pdf)
Eurogroup statement on Spain, 9 June 2012 (pdf)
 

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