Eurogroup Flash Report - 22 May 2017
Discussion starts 16:15
Part ane ~ state of play on reforms
COM (Moscovici): briefs on state of play with prior actions - 10
closer to 110 now since more done today). Huge effort made by
authorities. Further 21 marked pending. Need final push to comp
done by end of May. Areas where issues still open: labo
bargaining (explanatory notes to legislation need revisi
measures need to be assessed by GRECO, Council of Eur
measures in coming days.
ECB (Draghi): Also welcome the SLA, Importa
bringing in IMF; now need to focus on imple
has hurt growth, agreement has benefitted ¢
on markets, yields down. Swift im
Also a plea to EL authorities to imple
agreed in the context of the program:
should be indemnified against all
and their staff.
ed position
jslation v important.
TAT that have been
ormer ELSTAT presidents
legal actions against them
ESM (Reeling): A year si review, has been costly.
Agreement on policy pai
IMF (Thomsen): Also wel
supplemented with debt measur
legislation covers thre
reform, constitutioi
seeking legal opinio
address problem s
bargaining lanj
actions to be
fe can support with a programme if
\ave only seven prior actions. Recent
corrections needed on these ~ pensions
t this raised by court of auditors, we are
robustness of this reform and commitment to
erturned. Gn labour market, collective
ecific date for reversal, not agreed with us. Other
d notbe problematic,
EL (Tsak: a very big effort, is a very strong package, On ELSTAT, we
are hapy ‘ome a key deliverable before July, Some drafting issues
are small id much, eg. on collective bargaining. Happy to.address
and able compromise, On NPLs, happy to address. Just to recall
thal eed until everything isagreed, want to underline that
Gre its side of the bargain and more than most expected.
ents from floor.
(Wieser): Once the issues mentioned have been addressed we will receive a
mentation report and have pencilled in pravisionally a conference call
for’6 June to discuss the final compliance report and full EWG meeting on9 June,
1Depending on what is agreed today, relevant national procedures could tal
place in parallel so that ESM Board could take place in margins of Lux E
meeting on 15 June, ECOFIN would take implementing decision on 16 J
ESM Board of Directors would agree disbursement same day so that
disbursement could take place in second half of June. But all this dey
what happens on DSA and debt measures, which you will discuss,
implementation report is the easy part, now we come to the mo!
So
Debt discu:
PEG: IMF has made clear needs more specificity on debt t
has made clear 1) we need to stay within framework of Maj
decisions on debt relief would be taken at end of n
COM (Moscoviei): 2% primary surplu:
compliance w EU fiscal framework.
framework; take on board relevant cor
concessional character of EL debt; avoi
Will expect El. to remain in preventivs
ECB (Draghi): Agreement
addressed on a permane
adverse scenarios. Fully
Based on credible baseline and
plication of fiscal rules.
ESM (Regling): Running numbers, confirm, May be in line with our
scenarios,
IMF (Thomsen): Und
don’t think it is going
addressed, Last
15/20%. That,
‘ou are proposing to proceed in this way, but
way. Ignores a number of issues that should be
a framework, based on GEN. An abjective -
e shot (0 final calibration or approval or entry into force
at this stage. also agreed that the Fund would need to be able to conclude
that this ui -asures could allow for us to come on board, but we are
not there to tell our board today on this basis that the conditions
are in place: it agreed on primary surplus targets, nor on growth
ie ied something considerably more specific or you will not
yeree on this. We can live with the avoidance of haircuts and
that means extensions of maturities not only for EFSF but also
an facilities. | am very far away from being able to tell our
lat we are close to a strategy that we can agree to.
sakalotos): We think any proposal should be realistic and credible and send
al to markets that Greece has turned a page and growth needs to be
supported, needs to supply that clarity now. I think that if this is published as it
stands, spreads will increase and Greek economy will suffer, We had verydifficult negotiation with IMF, which was given a veto by DE and NL. So | had a
very weak hand. We have met IMF conditions and effectively have an IMF;
programme. And we think that as such, now the ball is in your court. ! am appy
to support any compromise. We will not mention QE...but a proxy for tHatisthat
the markets get what they are expecting, and a compromise would be th:
markets get a signal that Greece has changed. Investment is the re:
economy is stagnating and to change that we need to give a sign:
that Europe is not kicking the can down the road again.
FR (Lemaire): Want to congratulate Greeks on the measuresad
difficult that was. We want to support a compromise, but that nee
on clarity, and we da not see that here. We have difficult
assumptions, with maturities (we'd prefer 17 years); an‘
targets (prefer 2%). But main difficulty is that this does m
whether the IMF is on board - and nat half on boat
board, the ECB will not be able to provide QE.
DE (Schauble): Quotes from May 16 statemer
needed” etc, DE law is that any DE finmin ha}
programme without a mandate of th advance, Cannot
MF that at beginning of
750bn of which 500 from EA
programme always and Wve to negotiate a new
programme, and that w
Statement goes a long wa!
beyond what we agreed. Not ac
compromise. | have ng
find a solution.
reports on the significant efforts made by Greek
ard for Greece. Markets waiting for signal.
ye why we cannot agree on this. Fourth, I would like to
ir reaction to the paragraph about the role it could play.
ept the view that there is no possible room for discussion on
pic.
mir): I did not expect to be back here to discuss debt measures quite so
1 hii want to be constructive. We have all made mistakes including IMF: or
ould not be here. What matters here for us is that none of these measures
ve a negative impact on EFSF and ESM. Now, on growth - are we reallysaying EL is not expected to grow by more than 1% for so many years? This
alchemy but this is not my alchemy...
IMF (Thomsen): Perhaps was not sufficiently clear. My problem is that
statement further restricts the universe compared to May 2016. | think
respect the main principles, no haircuts, no transfers, but this furth:
us. I think we need to go beyond the universe of measures forese
restricts it.
str
thet
PEG: Let me explain, May 2016 did not only specify what could ni
also what could be. And there are constraints there. It's not open-et
is that there is a maximum programme authorised amo
parliaments and ask to increase EFSF guarantees ~ NL patliament
e 1 re are
will assess what
. We spent
accept that | can tell you. On growth, we have not put this
different assumptions. We have addressed this wht
is needed based on an IMF DSA, ie. based onan IMI
AT (Schelling): IMF told us DSA was not cred jures. Now
still not credible? 1% growth over 4 jint of the
programme? We agreed this progra ation the IMF would
ng on boar or not? Cannot be
wy dan't we make a bet? IF
Pf you are right, you pay
discussing new measures every fou
COM is right, you pay doubl
nothing because you are jake this bet, but yau will lose.
Si: Cannot go beyond M: \t. also the part of that statement that
there would be no except non some MS is missing from this
one.
PEG: This does not r recment, it builds on it, May statement is
valid.
ESM (Regling): At re could be an additional interest deferral by
up ta 2037. ( irgue that this is not very far reaching
underestimates the impact of this.
How to square this circle? Different involvement of IMF?
‘essary condition but see that it is for athers. What about the
programme w IMF in advisory role? You cannot be 50%
pregn: seems to be that now,
can have a short break and then discuss specifics of the statement. But
ue is that our various constraints don’t seem to allow us to close today.
think that we can take a major step today: 1) giving more clarity on what
based on IMF, And | will ask IMF also to take a big step and take aprogrammeto the board..even if it cannot disburse before the debt question is:
resolved.
IMF (Thomsen): This is an interesting proposal which we can conside to
board with a programme and disbursing later. I can raise this with
management but then let's not constrain this more with further
if we cannot get an agreement now, let’s not specify some variab]
others.
EL (Tsakalotos): Always understood that for you to go to board
to have debt that is sustainable, so I don’t understand this new p
it is‘a possibility, then it is the worst of all worlds for ELUBecause it mean
have negotiated very tough programme thinking IMF w«
debt is sustainable and allow EL to turn the page. | don’t
IMF in on one bit but not the other bit. Their partici
them saying our debt is sustainable.
IMF (Thomsen): Let me explain. We have in the p:
principle, when we have agreement ania poliey pi
but we do not have financing in pla
once that is done it helps catalyse what
about the DSA, not financing flows.
then let's not limit the universe of p
Euclid says, why this woul but the fact is that we don't
seem to be converging o
ink is good,
gard in principle and then
2 .e financing, Here it is
plore this, itis interesting, But
PEG: In my mind this we ig question mark, not give clarity to
markets.
FR (Lemaire): Do not likelthis lac rity. We do not need a rollover process,
we need clarity. {hay from our new president to accept clarity, not a
rollover process.
PEG: Undertsa to provide more clarity because we still cannot
provide full clatity. If jock heads together and get one figure, that would
be great, but not yet managed. So we could make progress but not have
the full d ich we never promised anyway.
er 4 hours:
not acceptable to Greece, Will give floor to Euclid to explain
in explain how I propose to proceed, including by taking back all
the two drafts of the statement circulated.
Jotos): Have had lots of conversations including w my PM, appreciate
‘to find common ground but have to say | am disappointed. We have
iuge efforts as part of anarrative and that narrative is now not on thetimetable. This document has a lot of things that could work for the Greek
economy and Greek debt sustainability but if one institutions says this dog@inot
say our debt is sustainable on this basis then the markets do not have the¢larity
they need. So let's take some more time. You have my personal commit at
the work to complete the prior actions will continue, We need this time to
to terms with what is on the table and work to improve it. IfT signe
now there would bea major political cri
happen I need to take time to think about it,
thi
PEG: The only conclusion | can come to tonight is that we have m.
progress on the policy package, and that EL will continue
lost and we will work towards a disbursement in the su!
will continue to work in the coming weeks and that at th
will try to conclude. [am personally committed to work ha
to be clear that reaching a full and comprehensive
everyone is not possible. It is not passible.
t Eurdghoup
DE (Schauble): Let's have no illusion. This is
been that we needed clarity today, some oth
clear statement in 2016 and the nai
on medium term measures today — not
very optimistic that things will impro
we had at hand today. Lesson to lear
not try to. change the narrative with
because some of us moves
failed. I'm sorry.
‘would geta decision
May 2016.1 am not
a better solution than
difficulties in adopting the
expressed by Wolfgang, some MS
Je to make a similar positive move in the
‘ad job and I hope that this work will not be
fora compromise. Hope that we will be able to
jeeting tonight, important for markets.
lost because we hav
communicate positi
rimate what has been done tonight, measures
case help the Greek economy. A political crisis in Greece
ncial crisis and those when they start we do not know
how th that we can conclude in three weeks and that IMF can
We are all members of the [IMF and there is an
these views in the IMF board.
disappointment and need to work to close gap in coming
1g options or tempering expectations.