Brussels, 17 February 2012
Preparation of Eurogroup and Economic and Finance Ministers Council, Brussels, 20 and 21 February 2012
EUROGROUP, 20 February
The Eurogroup meeting will start on Monday 20 February at 15.00hrs. The European Commission will be represented by Vice-President and Commissioner for Economic and Monetary Affairs and the Euro Olli Rehn. A press conference is expected to take place after the meeting.
1. Adjustment programme for Greece - including PSI (AAT)
Discussions will be based on the Eurogroup conference call of 15th February, on the outstanding issues regarding the second adjustment programme for Greece. Substantial further progress has been made in recent days. First, strong assurances were provided by the leaders of the two coalition parties in Greece's government. Second, the Troika finalised and presented its analysis on the sustainability of Greece's public debt. Third, further technical work between Greece and the Troika has led to the identification of the required additional consolidation measures of € 325 million and the establishment of a detailed list of prior actions, together with a timeline for their implementation. Issues pending include the specific mechanisms to strengthen the surveillance of programme implementation. On the basis of the elements that are currently on the table and the above-mentioned additional input, the Commission expects the Eurogroup to take all the necessary decisions concerning the second Programme for Greece at this meeting.
The European Commission remains strongly committed to reinforce the assistance to the Greek administration on the ground to achieve these objectives as regards return to sustainable growth and employment.
Vice-President Rehn earlier this week said: "The Greek authorities and political forces should now take full ownership and make the case for the second programme, and then fully implement it, in order to ensure the return of the country to sustainable economic growth and job creation." And he added: "It is evident that the economic model that Greece was following until 2009 could no longer be applied, as it lead to serious imbalances and uncertainties as the country systematically lived beyond its means for a decade. The second programme is going to be very demanding, but it will pave the way to redress the difficult situation. In any case, Greece should have implemented most of these measures to balance its economy and boost sustainable growth and employment even in the absence of such a programme, already several years ago."
2. ESM/EFSF – lending capacity (AAT)
Ministers will hold a first discussion on the ways and means to reinforce the effective lending capacity of the financial backstops, the temporary European Financial Stability Facility (EFSF) and its successor and permanent instrument, the European Stability Mechanism (ESM). On 9 December 2011, the Heads of State and Government of the euro area decided to reassess the adequacy of the overall ceiling of the EFSF/ESM of € 500 billion in March 2012.
The European Financial Stability Facility (EFSF) leveraging is being deployed through the two concrete options agreed upon by the Eurogroup on 29 November 2011.
Last December, euro area leaders agreed on an acceleration of the entry into force of the ESM treaty. The Treaty will enter into force as soon as Member States representing 90 % of the capital commitments have ratified it. The agreed objective is for the ESM to enter into force in July 2012.
Concerning their financial resources, it was agreed that the EFSF will remain active in financing programmes that have started until mid-2013 as provided for in the Framework Agreement, and it will continue to ensure the financing of the ongoing programmes as needed.
3. ECB Executive Board Member (AAT)
The eight-year term of Mr José Manuel González-Páramo's as ECB Executive Board member will end on 31 May 2012. To appoint a European Central Bank Executive Board Member, the Council makes a recommendation (with only euro area countries voting) to the European Council, after having consulted the European Parliament and the ECB Governing Council. The European Council then decides on the appointment (by qualified majority, again with only euro area countries voting).
Before consulting the European Parliament and the ECB Governing Council, the Eurogroup considers the applications for a successor. The deadline for applications was 19 January, 2012. Spain nominated Antonio Sainz de Vicuña (head of ECB's legal department) as its candidate, while Slovenia nominated Mitja Gaspari (Minister for Development). Luxemburg nominated Yves Mersch (Governor of the Central Bank of Luxembourg). The Eurogroup reviewed the applications at its meeting on January 23 and should now agree on a candidate. A decision will most likely be taken at the Eurogroup meeting on 12 March.
Council of Economic and Finance Ministers (ECOFIN), 21 February
The EU's Council of Economic and Finance Ministers will start on Tuesday 21 January at 10.00hrs. The European Commission will be represented by Olli Rehn, Vice President and Commissioner for Economic and Monetary Affairs and the Euro. A press conference is expected to take place after the meeting.
1. Proposals from the Commission on Economic Governance (AAT)
The Council is expected to adopt a general approach on the two proposals the European Commission adopted on 23 November to further strengthen economic governance in the euro area. The first Regulation regards monitoring and assessing draft budgetary plans of Member States and ensuring the correction of excessive deficits of euro area countries.
The second Regulation strengthens the economic and budgetary surveillance of Member States experiencing, or threatened with, serious difficulties with respect to their financial stability in the euro area.
2. Macro-economic Imbalances – Alert Mechanism Report (AAT)
The European Commission will present the Alert Mechanism Report, which it adopted on 14 February 2012 (IP/12/132) (MEMO/12/104). The report kicks off surveillance under the new Macroeconomic Imbalance Procedure, which forms part of the "six-pack" set of EU rules on economic governance. Based on a scoreboard of 10 macroeconomic indicators, and taking into account other relevant data, the European Commission identified 12 EU Member States whose macroeconomic situation needs to be analysed in more depth: Belgium, Bulgaria, Cyprus, Denmark, Finland, France, Italy, Hungary, Slovenia, Spain, Sweden and the UK. It is these subsequent in-depth reviews that will assess whether or not imbalances exist and whether or not they are harmful. If necessary, the European Commission will issue a recommendation to the Member State concerned to take appropriate action to correct the situation or prevent imbalances from persisting.
The Council will have a first exchange of views on the report. Ministers are expected to take note of the presentation and to return to a substantial discussion at the ECOFIN meeting of 13 March.
Speaking at a press conference in the European earlier this week, Vice-President Rehn said: "This report is a screening device and our main surveillance tool to detect the build-up of potentially risky and damaging macroeconomic imbalances in areas such as competitiveness, export performance, current account, private debt or the housing market. The current crisis was greatly amplified not only by unsustainable public finances, but also by the significant build up of these macroeconomic imbalances. In reverse, a stable macroeconomic climate can contribute to restoring confidence – not just in the markets but also, crucially, amongst the wider public."
The Commission sees the new macroeconomic imbalances analysis as a way to deepen the dialogue about economic policymaking with the Member States.
This report fits in the timeline of the European Semester. This further in-depth analysis should orientate the preparation by Member States of their National Reform Programmes, to be submitted to the Commission in April, and it will feed into the preparation of the Country Specific Recommendations that the Commission will adopt and publish in May.
3. Preparation of the European Council meeting on 1-2 March 2012 (AAT)
Ministers will review the preparations of the next European Council, including the implementation of the European Semester and the Euro Plus Pact
4. Preparation of G20 meeting of Finance Ministers and Governors in México on 25-26 February 2012 (AAT)
Ministers are expected to endorse the EU terms of reference for the G20 meeting of Finance Ministers and Governors of Central Banks taking place in Mexico on 25-26 February 2012. Vice-President Rehn will attend that meeting.
Ministers are expected to focus on two issues: (i) reviewing the adequacy of IMF resources and outlining a process to reach an agreement; and (ii) follow-up on the G20 Cannes Action Plan for Growth and Jobs. The European Commission aims for an agreement to the increase the resources of the International Monetary Fund at the G20 meeting and IMF meetings in April.
Ministers will also discuss the monitoring and assessment of progress in implementing country-specific reform commitments undertaken within the context of the Cannes Action Plan on Growth and Jobs. Last December, euro area countries agreed to contribute up to €150 billion.
5. Discharge in respect of the implementation of the budget for 2010 (ET)
The 27 EU Finance Ministers are expected to adopt a recommendation granting discharge to the Commission for the implementation of the EU budget for the financial year 2010. The recommendation, which requires qualified majority in Council, is based on the Court of Auditors' report of 10 November 2011 (see IP/11/1332). Following its adoption, the recommendation will be presented to the European Parliament's budgetary control committee at the end of February 2012. The vote and adoption of the discharge resolution is scheduled in plenary session of the European Parliament in May 2012. The Council recommendation is an essential part of the budgetary discharge procedure as laid down by EU rules (article 319 of the Treaty on the functioning of the European Union).
6. Budget guidelines for 2013 (PF)
The Council is expected to adopt its guidelines (recommendations) for the 2013 EU budget. On 23 January 2012, Budget Commissioner Janusz Lewandowski called on all EU institutions to seek internal savings when drawing up their expenditure estimates for next year. The European Commission will present its draft EU budget for 2013 at the end of April 2012.
7. Climate Finance (AAT)
The Council is expected to adopt conclusions on the follow-up to the Durban climate conference. It should welcome the achievements of this conference and suggest follow-up actions. The Durban conference marked an encouraging step forward in international efforts to combat climate change. The Durban agreement – the platform for enhanced action – aims at securing a legally binding agreement by 2015 with all countries on board, and notably all major economies. The EU is recognized as having played a major role in forging this outcome. Council conclusions should restate the EU's commitments and proactive role in the process.
8. AOB (CH)
The Presidency will debrief on the "trilogue" on the European Market Infrastructure Regulation (EMIR). The European Parliament and the Council reached an important agreement on a regulation for more stability, transparency and efficiency in derivatives markets (EMIR)). It is a key step in our effort to establish a safer and sounder regulatory framework for European financial markets. The regulation ensures that information on all European derivative transactions will be reported to trade repositories and be accessible to supervisory authorities, including the European Securities Market Authority (ESMA), to give policy makers and supervisors a clear overview of what is going on in the markets. The regulation also requires standard derivative contracts to be cleared through central counterparties (CCPs) and establishes stringent organisational, business conduct and prudential requirements for these CCPs. This will considerably increase financial stability and safety in the EU by preventing the situation where a collapse of one financial firm can cause the collapse of other financial firms.