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Vice-President of the European Commission and member of the Commission responsible for Economic and Monetary Affairs and the Euro
Remarks by Vice-President Olli Rehn at the Eurogroup press conference
8 July, 2013
Good evening. I would like to begin by thanking Christine Lagarde and her staff for the very valuable policy advice which has been delivered in the form of the IMF’s Article IV consultation of, and with, the euro area.
I will leave it to Christine to outline the key findings of the consultation. I agree, and the Commission agrees, on the four points outlined by Christine Lagarde. I want to stress the excellent cooperation that has taken place between our services. There is a broad convergence in views between the Commission and the IMF, both about the actions taken and the next steps to be taken to deliver sustainable growth based on sound public finances.
In particular, I share the view that a full banking union is necessary to reduce financial fragmentation, and so is a profound cleaning up of banks’ balance sheets through comprehensive and forward-looking asset quality reviews and system-wide stress tests.
I also agree we need to have credible fiscal backstops in place - national and/or European. In that context, one might take note that we also discussed today the Spanish banking sector reform programme, which has indeed been backed up by both national and European fiscal backstops.
This week, the Commission will move to put in place the next building block of the banking union with our proposal for a Single Resolution Mechanism, in fact on Wednesday. It will be a well-grounded and ambitious proposal, because this is a big challenge and it demands a bold response. I hope that Member States will show a similar level of ambition as discussions on this move forward in the coming months.
On Greece, I want to welcome the political agreement reached this evening on the third programme review. I want to thank our Greek partners, the ECB and IMF mission teams and our own people for very smooth work, day and night, which facilitated the agreement, despite the recent political turbulence, which did not make it any easier.
The political agreement has been made possible by the steps forward that have been taken in recent weeks, not least the completion of the process of bank recapitalisation in Greece. This should allow for liquidity to begin to flow back into the real economy and help to relieve the very tight credit conditions affecting small businesses and households.
At the same time, the Eurogroup has been very clear that in many areas we need to see more determined implementation of measures needed to boost competitiveness and investment, and to accelerate recovery and job creation.
That means stepping up the reform of the tax administration, to boost its efficiency and autonomy. This is not only about increasing fiscal revenues, it is also about social fairness.
It also means seeing through the modernisation of the public sector as a whole. Again, this is not only about cost savings: it is about creating a more efficient civil service that is geared to serving the needs of citizens and businesses.
And it means freeing up markets in goods and services. The adjustment process has not yet translated into lower prices for consumers, because obstacles persist to a properly functioning market in too many sectors, including energy and transport, as well as professional services. It is the Greek people who are paying this price. This is why it is essential that the Greek government takes effective steps to boost competition, which will lower prices, as well as create new opportunities for investment and employment, especially for Greece’s young people. On this point, we are working to support the authorities in their efforts to provide targeted employment and training programmes, and to give access to primary healthcare for the uninsured.
In short, it is time to step up the momentum of reform in Greece, to support the return of confidence for the sake of growth and job creation.
Lastly, I shared with the Eurogroup the Commission’s view of the state of play of implementation of the Country-Specific Recommendations for Slovenia. In April, we presented our in-depth review of the Slovenian economy and found that the country is displaying excessive imbalances. I said then the situation was serious but manageable, provided urgent action was taken. That assessment still holds but the clock is ticking.
In particular, there must be credible implementation of our recommendation on banking sector repair. Quality is more important than speed when it comes to the due diligence underway, composed of an asset quality review and bottom-up, system-wide stress tests of banks. The EU requirements have been communicated to the Slovenian authorities. We will continue closely monitoring the implementation of the recommendation to see that it is on track and in line with the requirements.