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Good
evening and welcome to this press conference. We have just finished the
Eurogroup meeting and we've come to a positive conclusion on the
proposals by the institutions. All the intense work of the last week has
paid off and let me here also extend my thanks to the teams of the
institutions and the team of the Greek government that had worked so
hard these last months to reach an agreement. We also have reached
agreement at the political level in the Eurogroup. We had a very
constructive and good atmosphere. Of course there were differences, but
we have managed to solve the last issues. We have issued a statement
outlining the details of our agreement. I will therefore mention only
the main elements.
First,
we welcomed the agreement that was reached between Greece and the
institutions on policy conditionality. It is to our mind in line with
the key objectives set by the euro summit on 12 July, and if implemented
with determination -- of course it always boils down to determination
-- it will allow the Greek economy to return to sustainable growth.
Secondly,
we commended the Greek authorities on the strong commitment shown in
the last weeks in the normalisation of working methods with the
institutions. I think that was very helpful to have a good and fruitful
process and also we've seen important and determined legislative steps
over the past weeks and days even, in Greece, and that has helped in the
process of rebuilding trust; and many of the colleagues in the
Eurogroup made that point.
Thirdly,
on the policy conditionality, we welcomed the broad scope of the policy
measures contained in the Memorandum of Understanding (MoU), as agreed.
It's a comprehensive and ambitious reform package, it addresses the
main challenges both on reaching sound public finances to return to
growth, but also structural policy frameworks to enhance
competitiveness. And finally it safeguards financial stability; it deals
with the issues with the banks.
On
the latter point, there will be later this year, this autumn, an asset
quality review and stress test, and on the basis of that,
recapitalisation will take place. In that process the bail-in instrument
will apply for senior bondholders, whereas the bail-in of depositors is
explicitly excluded. You will find this in our statement.
Fourthly,
the Eurogroup underlined that a significantly strengthened
privatisation programme is a part of the new ESM programme. Therefore it
is important that the independent fund which will be set up will be
established in Greece at the latest by end-2015. It will be under the
supervision of the relevant European institutions. It will take on board
the privatisation of state assets and the proceeds of this fund will,
for the first €25 billion, completely be used to repay debt and for the
second part of the target of €50 billion, it will be 50/50: 50% to repay
debt and 50% can be reinvested. This fund will be set up before the end
of the year. Proposals have to be made already at the latest by end
October 2015. The ownership of this fund will be transferred as soon as
possible after the recapitalisation of the banks has taken place later
this year.
Fifth,
on prior actions. We welcomed, as I already said, the comprehensive set
of prior actions that has been legislated by the Greek authorities. The
most recent prior actions legislated have been positively assessed by
the institutions and I think this demonstrates that programme ownership
has been picked up seriously and constructively by the Greek
government.
The
overall financing envelope of the agreed ESM programme will amount to
€86 billion. This includes a €25 billion bank buffer, which can be
available if needed to address potential bank recapitalisation and
resolution costs. This money will, later on, after the first review as I
said, be transferred to segregated account in the ESM. Whether it is
needed will be decided of course after the assessment of the banks and
the stress test later this year.
On
debt sustainability - and this is of course the key issue - a debt
sustainability assessment has been provided by the Commission, in a
strong liaison with the ECB. The analysis basically concludes that debt
sustainability can be achieved through a far-reaching and credible
reform programme -- I think we have that in front of us -- and
debt-related measures without nominal haircuts, because that was made
explicit in the euro summit statement of 12 July. The Eurogroup stands
ready to consider, after the positive completion of the first programme
review, possible additional measures to ensure gross financing needs
remaining at a sustainable level. “Gross financing needs” is the debt
service approach that we will take when we look at the debt
sustainability. We will do that after the successful completion of the
first review.
Finally,
we welcomed the intention of the IMF Board to consider further
financial support for Greece. They will do so in the autumn. We stressed
that such IMF involvement for the Eurogroup is indispensable. We
welcomed the positive assessment of IMF staff of the policy
conditionality contained in the MoU. For the IMF Board to consider
further financial support, there are two issues that are crucial and we
realise and accept that. First of all there needs to be a full
specification of fiscal, structural and financial sector reforms; and
secondly that debt sustainability is ensured. On those reforms, just to
mention one is the pension reform and we have again underlined that at
the latest in October there has to be clarity on those pension reforms
from the side of the Greek government, in agreement with the
institutions.
Finally,
as regards the next steps, the necessary elements are all in place now
to launch the relevant national procedures to get the formal approval of
the ESM financial assistance programme. We expect that the ESM Board of
Governors which will take the formal decision will be in a position to
approve the proposal on Wednesday, 19 August, by the end of the day; and
that it would also unlock the initial fist tranche of the programme.
That will be all from me. I will now give the floor to Vice-President Dombrovskis and to Klaus Regling.
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