Eurogroup Committed To Fiscal Consolidation

17 May 2012 -

Following the latest Eurogroup meeting in Brussels, Luxembourg's Prime Minister and Eurogroup President Jean-Claude Juncker confirmed that the Eurogroup's consolidation strategy, in accordance with provisions contained in the Stability and Growth Pact, 'remains appropriate' and will therefore continue to form the cornerstone of its strategy to correct fiscal and economic imbalances to overcome the crisis and to return to sustainable growth.

Adamant that there is no contradiction between fiscal consolidation and growth-orientated policies, the Eurogroup President emphasized that on the contrary, both policies are "mutually reinforcing" and should therefore be pursued in parallel.

During the course of the Eurogroup meeting, Eurogroup ministers analyzed the financial and budgetary situation of several member states.

The Eurogroup welcomed the measures announced by the Spanish government recently to continue reforms in the banking sector, to support investor confidence and to mitigate the vulnerability of the country's banks. The ministers nevertheless urged Spain to speed up its external analysis of the banking sector, and to take any measures necessary to implement credible security mechanisms.

Here, Juncker underlined that given "the current circumstances", speed is of the essence.

The Eurogroup commended both Ireland and Portugal on the solid implementation of their support programmes. According to the Eurogroup ministers, Portugal's ambitious fiscal consolidation efforts and structural reforms have already borne the first fruits in terms of rebalancing the economy towards a sustained growth in exports.

Alluding to the crisis situation in Greece, Juncker explained that the Eurogroup had taken note of the results of the legislative elections held on May 6, and now expects the swift formation of a new government in Greece, which will both respect and have a sufficient parliamentary majority to implement the agreed programme.

Since May 2010, eurozone member states and the International Monetary Fund have made a significant contribution to Greece to support the country in overcoming its economic problems. Financial assistance currently stands at EUR148bn (USD188bn), although the board of directors of the European Financial Stability Facility (EFSF) have recently agreed to disburse the remaining EUR5.2bn of the first loan tranche (EUR39.4bn), of which EUR1bn will be paid out before the end of June.

Concluding his remarks, Juncker warned that although the Eurogroup acknowledged the extent of significant efforts made by the Greek people, now is not the time to relax these efforts. On the contrary, fiscal and structural reforms are the best guarantee for a more prosperous future for Greece within the eurozone, the minister added.

It is the Eurogroup's intention to keep Greece in the eurozone, and the group will make every effort to achieve this, Juncker concluded.