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Welcome
to this Eurogroup press conference.
We
had an extra Eurogroup specially on the Greek programme. We discussed basically
three topics: one is the policy package coming from the agreement which we
achieved last summer; second, an additional contingency mechanism and third we
had a first discussion on debt and sustainability and what needs to be done
there.
So
first, on the package the Eurogroup welcomed the agreement that was achieved on
the policy package that should now lay the way for the successful completion of
the first review of this programme. The first review includes also the
implementation of the NPL strategy and the privatization programme. But the core
of that package is the pension reform, personal income tax reform and additional
fiscal parametric measures. Some of them have been legislated last night in the
Greek parliament and the institutions will now complete this part of the process
to assess whether everything is in accord with the agreement and to finalize
also on the basis of further discussion the additional contingency
mechanism.
So
a few words on that mechanism: it will be legislated up front; it will ensure
that, when necessary on an objective basis, Greece fails to meet the annual
primary surplus target in the programme, automatically this mechanism will come
into place. It will look at expenditure measures, including non-discretionary
measures that can be replaced, at a later time, by structural measures to make
sure that the programme, the budget, is structurally back on track and in that
structural approach also revenue measures can be put in place.
So,
what we did on the contingency mechanism is basically take the last proposal
from the Greek government and force it, in our discussions today, to make sure
that there is the option of permanent structural measures, agreed with the
institutions, including revenue measures which could become effective in the
year thereafter. So this is an addition, an amendment to the Greek proposal.
The
privatisation programme is also part of the first review we have put in our
conclusions today. The Supervisory Board of this Privatisation and Investment
Fund will be appointed by June 2016 and the fund will become fully operational
not later than September this year.
Then
on debt we had a first round of discussion, looking at the necessity, the
timing, the design and the conditionality of debt relief measures. Of course,
any measures will be conditioned upon full completion, full implementation of
the measures agreed in the programme and will be considered later on. There were
no decisions today.
We
agreed on a number of guiding principles: why are we doing this, why are we
looking at further debt measures, of course to facilitate, to make it easier for
Greece to gain access to the markets again, to smoothen the repayment profile in
the coming years, to incentivise the country's adjustment process and to
accommodate uncertain GDP growth and interest rate developments in the
future.
What
we will do in the coming weeks -- the EWG will be asked to do that work with the
experts -- is to design and establish a benchmark according to which under the
baseline scenario of a debt sustainability analysis Greece's gross financing
needs should remain on a sustainable path. So if you remember, in 2012 we talked
about having a cut or reducing the debt to GDP in a percentage which changes
basically the method when looking at the annual debt burden and annual debt
service. And we need to make, to develop that method and create a benchmark for
it. So that's the first thing that the technical people will have to do.
And
then, in today's meeting we discussed the way forward; we foresee a sequence
approach: what we could do in the short term, the medium term and the long term.
For the short term, it is basically about possibilities to optimize debt
management, so the total debt could be further optimized, reducing the cost for
the Greek side, making it more manageable in the future. For the medium term, we
ask the EWG to explore specific measures, such as (they were already mentioned
last summer) longer grace and payment periods, specific measures which can be
used if necessary at the end of the programme, so no earlier than 2018. And
there were two: one specific point that was mentioned and we will ask the EWG to
look at it, and it is the use of SMP and ANFA profits. So this is about what
could come into effect at the end of the programme in 2018: specific measures to
reduce debt. And the third layer is for the long term: the Eurogroup stands
ready, if necessary, and conditional upon compliance with the primary surplus
targets, to further assess at the end of the programme the need for possible
additional debt measures. So this is at the end of the programme: we will also
look ahead and see what could be needed, what approach could be needed to make
sure that also in the coming decades Greece stays on track also in terms of debt
sustainability. That is a decision to be taken at the end of the programme in
2018. The EWG has a mandate to work further on the technicalities of these three
approaches: short term, medium term and long term, and together with the
agreement and the implementation of the policy package, this agreement on debt
we are going to try to achieve in the next Eurogroup. This agreement on debt and
adequate financing assurances by the European partners are expected to allow the
IMF to participate in the programme.
Finally,
on the outcome of today's meeting, we have, so to speak, two work strands ahead
of us: one is to complete all the measures in the short term package and make
sure everything is done as agreed, and that could then lead, after a number of
procedural steps, to the next disbursement to Greece; and the other work track
is, as I said, the EWG would do technical work on debt measures in short term,
medium term and long term. So we have two work strands ahead of us and we will
meet again in the regular Eurogroup on 24 May and discuss all these issues once
again.
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