Vilnius, 13/09/2013 (Agence Europe) - On Friday 13 September, eurozone finance ministers postponed a raft of decisions about the situation in countries in receipt of aid. The only decision they made was to give the go-ahead to the payment of some aid for Cyprus.
The eurozone ministers agreed to meet on 22 November to discuss the draft budgets that the euro nations must notify to the European Commission by 15 October now that it has the right to scrutinise budgets in advance.
The European Commission is planning to unveil an assessment in November of the various draft finance laws in line with its macroeconomic forecasts for the autumn. Despite encouraging signals of green shoots of recovery, Euro Commissioner Olli Rehn took a firm line that it is too soon to say that the crisis is over. On a gloomier note, Jörg Asmussen of the ECB Executive Board said that some of the upturn experienced in the eurozone in the second quarter of 2013 is temporary and true recovery will take longer and will start emerging at the end of the year.
European Semester. Rehn predicted three months of intense work ahead, pointing out that the European Commission was taking very seriously its responsibility to ensure that countries practise what they preach.
At present, the Commissioner believes that France has begun an important phase of economic reforms, but much remains to be done in the country to reduce the cost of labour (see EUROPE 10920). French Finance Minister Pierre Moscovici said that France would act as fast as it could. The head of the Eurogroup, Jeroen Dijsselbloem, said that political stability in Italy was of the highest importance for economic recovery. Rehn said efforts must be kept up in Italy, which must reassure its partners about its commitment to achieving its budget objectives.
Countries in receipt of aid. Several countries in receipt of financial aid are approaching the end of the aid programme. Commissioner Rehn commented: “I can tell you that there will be no single rule or uniform pattern to be followed here. We will need to look very carefully at what the optimal solution will be in each case to ensure a successful exit. What is clear is that the objective in all cases will be to ensure financial stability; to strengthen economic recovery; and to enable successful programme exits for the countries concerned”.
Ireland will be discussed at the Eurogroup meeting in November.
The timeline for Greece will depend on the results of the assessment by the troika (European Commission, European Central Bank and International Monetary Fund) that is due to begin on Monday. So debate about a possible gap in financing will take place in November or December. Troika experts will be in Lisbon, too, next week.
Dijsselbloem said it was important for Portugal to stick to what has been agreed in its programme, including the budget deficit targets (see EUROPE 10920). Lisbon has not yet made any official request for a softening of the targets (a reduction in its public deficit target to 4.5% of GDP in 2014 rather than the planned 4%), preferring to wait until the next troika assessment begins next week.
As expected, the eurozone gave the go-ahead to the next batch of aid for Cyprus, which will now receive €1.5 billion by the end of the month. The cash will be used to recapitalise the country's cooperative banks. On 16 September, the IMF will decide on the payment of aid of €86 million. The Cypriot finance minister announced that the country had signed an official agreement with Moscow on restructuring the Russian loan of €2.5 billion granted to Cyprus in 2011. (EL/transl.fl)