The Eurogroup that took place on Saturday discussed among other topics, the developments surrounding Greece and Cyprus.
During a press conference after the meeting, Eurogroup President Jeroen Dijsslebloem said that the interim Greek Finance Minister Giorgos Chouliarakis informed his counterparts that the caretaker Greek government is proceeding with the preparation for the implementation of the Greek bailout program.
“From our perspective we can of course only respect the democratic process and shall await the elections results. Timely implementation of reforms after the election is of course crucial, and time is limited,” he said.
The Eurogroup President rejected the possibility of a re-negotiation of the bailout deal, regardless of the election results and noted that Saturday’s Eurogroup did not discuss the Greek debt.
European Commissioner for Economic and Financial Affairs Pierre Moscovici noted that the reforms Greece must implement by October are numbered, but argued that the program is ambitious and its substance should remain unchanged. He also added that the International Monetary Fund’s participation in the Greek program is necessary.
European Stability Mechanism head Klaus Regling said that the 10 billion euros that will be used for recapitalization of the Greek banking sector are in a special account in Luxembourg. He added that an additional 3 billion euros can be given to Greece by November if the country implements the necessary reforms and noted that the response of markets and credit rating agencies to the bailout agreement so far is encouraging.
On the other hand, Dijsselbloem noted that the economic recovery in Cyprus is stronger than what was expected at the beginning of the year.
Eurogroup’s Full Statement on Cyprus:
The Eurogroup welcomes the successful conclusion of the seventh review mission in the context of Cyprus’ macroeconomic adjustment programme, which took place in July. The fiscal developments continue to exceed expectations, the financial situation of the banks is showing signs of gradual improvement and some progress has been noted on important growth-enhancing reforms. The Eurogroup is encouraged that the economic recovery in Cyprus is gaining strength, the labour market is showing signs of stabilization, although unemployment remains at a high level, and the economy showed overall resilience in the past few months.
The Eurogroup recalls that addressing the excessive level of non-performing loans remains a top priority for Cyprus in order to reignite credit growth and ensure that banks continue to improve their resilience. In this regard, we stress the importance of an effective implementation of the recently enacted insolvency legislation and of the enhanced foreclosure framework, together with other measures adopted recently to speed up the reduction of arrears. The determined pursuit of financial sector reforms, including legislation to facilitate the sale of loans, remains necessary to secure a decisive reversal of the non-performing loan trend.
The Eurogroup commends the Cypriot authorities for the progress that has been made to date, and calls on them to keep up the reform momentum. The timely implementation of the growth-enhancing reform agenda, including privatisation and public administration reform, is essential in order to restore Cyprus’ growth potential, while safeguarding the protection of the most vulnerable groups.
The Eurogroup agrees to endorse in principle the updated Memorandum of Understanding as well as the disbursement of the next tranche of financial assistance to Cyprus. We consider that the necessary elements are now in place to launch relevant national procedures, paving the way to the formal approval by the ESM governing bodies of a disbursement of EUR 500 million in October. Concurrently, the IMF Executive Board is expected to decide on the disbursement of about EUR 125 million.
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