In today’s College, we discussed the follow-up on the Euro Area Summit which took place last weekend.
At the Summit, Euro area leaders asked the Commission to work closely with the Greek authorities to successfully use more than €35 billion available from EU Funds to support job creation and economic growth in the country.
In this context, we presented this morning a Communication on a 'new start for jobs and growth in Greece'.
As you know, the Greek economy is back in recession, the banking system is on the verge of collapse and the Greek state is building up outstanding payments.
The economic problems in Greece are taking their toll with serious social consequences.
What Greece needs now is stability and confidence. Once financial stability is restored, the country can once again look towards economic recovery, job opportunities and a better future, particularly for the most vulnerable.
For this to happen, the Greek authorities need to:
- urgently reform the state and put in place an efficient and corruption-free administration,
- ensure social security systems that are sustainable and fair,
- create more attractive conditions for investment,
- ensure well-functioning labour, product and capital markets.
In other words: transform the economy and the state - making it modern, efficient and fair.
Swift implementation of these reforms is essential to rebuild confidence and trust among Eurozone 19 democracies.
Greece faces urgent financing needs. It has outstanding payments and arrears to the ECB and IMF that need to be paid in the coming days.
Euro Area leaders therefore invited the Eurogroup to address these issues as a matter of urgency.
Member States, together with the institutions, explored the options available. There are not many. Possible options have included increasing the T-bills ceiling, transferring SMP/ANFA profits, using the EU budget or bilateral loans.
Given the political, legal, financial and time constraints, there were two most realistic options left: bilateral loans and the programme from the European Financial Stabilisation Mechanism, or EFSM.
However, there are currently no prospects for any bilateral help.
Given the obvious absence of any other, better solution, the best possible avenue left is the EFSM programme.
The EFSM is a community instrument that can provide financial assistance in the form of loans to all 28 EU Member States - provided they implement an adjustment programme with strict conditionality.
This is why the Commission, responding to the request from the Greek authorities, has proposed to the Council to grant short-term emergency assistance, up to 3 months, from the EFSM and to build the bridge needed until the ESM programme is in place.
The EFSM loans would then be repaid with the money from the ESM disbursements.
This is not an easy option. We are aware of serious concerns of non-Euro area Member States.
We are therefore working on arrangements to protect non-Euro area Member States from any negative financial consequences, should the EFSM loans not be re-paid.
At the time when the ESM was put in place, the Heads of States and Government agreed not to use the EFSM. Therefore, some Member States have serious concerns. We also need to address this political difficulty.
This proposal will be discussed by all 28 EU Member States and the decision will be made by the Council of Ministers.
Today's Comminication sets out the substantial support available for Greece from the EU budget. It amounts to more than €35 billion until 2020. Corina will elaborate more in a moment.
Just to answer some questions: What is this money used for? And where will this money come from?
- €20 billion will come from the European Structural and Investment Funds
- A further €15 billion from the Common Agricultural Policy
- An additional €280 million is available for the most vulnerable
- And there is the Youth Guarantee and other forms of EU financing that are also available
If used to its full potential, and wisely targeted and well spent, this funding can pump investment directly into the real economy, creating jobs and raising the living standards of Greek people.
It will provide a powerful basis for an economic turnaround.
The Commission is also offering technical experts who have proven expertise in helping countries such as Greece to use EU funds wisely and implement important reforms ranging from building more efficient tax systems to tackling fraud and corruption.
Lifting the uncertainty around the Greek economy and restoring financial stability are vital for re-launching growth and rebuilding investor confidence.
The full mobilisation of EU funds will catalyse the recovery.
We are here to support Greece in this process as it reforms its economy and gives hope to its people.
I now invite Corina to present the Communication in more detail.