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Vice-President of the European Commission and member of the Commission responsible for Economic and Monetary Affairs and the Euro
Speaking points by Vice-President Rehn at the press conference of the meeting of the Eurogroup
Eurogroup Press Conference, Brussels
Brussels, 10 March 2014
Since the last Eurogroup, I have presented the Commission's Winter Economic Forecast and outlined the challenges facing certain Member States when it comes to balanced growth and job creation based on sound public finances.
Based on that, I reported to the Eurogroup this evening on the economic situation and on macro-economic imbalances. The economic backdrop today in Europe is one of a gradually strengthening recovery. Domestic demand is getting firmer, financing conditions have been improving and investment is picking up. The imbalances, which built up over the previous decade, are gradually receding.
At the same time, challenges remain, including the still weak competiveness in a number of countries, and still subdued demand and subdued investment in others. The biggest risk to the recovery is that complacency leads to a slowing of the momentum for economic reform.
Following the Commission’s analysis of macro-economic imbalances, which I presented to the Eurogroup today, the contribution of the largest euro area economies to growth in Europe is particularly important. In that context it is essential to continue with, and intensify, structural reforms and pursue consistent fiscal consolidation in Italy and France.
Moreover, it is important to continue the orderly deleveraging and transformation of the economy in order to lift employment in Spain; and to further strengthen domestic demand and especially domestic investment in Germany. With this complementary economic strategy, the euro area's four largest economies would indeed do the best service for sustainable growth and job creation in Europe.
I find it is very important that we have this opportunity to discuss these matters in the Eurogroup and I trust that the Member States concerned take these considerations into account when they prepare their Stability and National Reform Programmes which will form the basis of the assessment of the economic policies in spring.
Regarding the programme countries, I have been able to inform ministers this evening that the economic adjustment programmes are on track in both Cyprus and Portugal.
In Cyprus, the prior actions for the disbursement of the next tranche have been met, such as the new privatisation law. Moreover, while we are fully aware of the still very difficult situation for people in Cyprus, the contraction in the economy has been significantly less severe than was forecast one year ago.
In Portugal, the 11th review mission concluded ten days ago with an upward revision of the growth forecast for this year, as well as a significantly improved outlook for employment. Portugal thus remains on track to exit its programme successfully in May.
Concerning Greece, we have discussed the state of negotiations in the context of the current review mission, which is still ongoing in Athens. The talks are moving forward in a constructive atmosphere but there remain a number of differences to be overcome in order to reach an overall agreement. Our staff continue to work very hard to reach an agreement with the Greek authorities which could form the basis for a successful conclusion of the review.
I also reported on the ways the Commission set out last week to provide financial and economic assistance to Ukraine. One of these is through an increased macro-financial assistance programme worth €1.6 billion to support the stabilisation and reform of the economy. A first tranche of this assistance could be rapidly disbursed once an agreement with the IMF is in place.
In other words, there is already a decision and a mandate for €610 million and we are considering €1 billion in addition to this, which makes this €1.6 billion, of course, conditional to the economic reforms in Ukraine and an agreement with the IMF being in place.
Around a week ago, we deployed a fact-finding mission to Ukraine with a view to assess the short-term financing needs of the country. We are now analysing the findings of this mission and we are in close contact with the IMF, whose own mission is still on the ground in Kiev.
You may ask why the European Union should support Ukraine. For many, it is obvious, but let me explain why. As we want to help to Ukraine to stabilise the political situation, it is essential to create the conditions for economic stabilisation. We have to recall that Ukraine lies in the middle of the European continent and we need to do our part to ensure stability and security in that important part of Europe.
That’s the reason why we stand ready to provide conditional financial assistance once the IMF agreement is in place and once Ukraine has started serious economic reforms.