Brussels, 15/11/2013 (Agence Europe) - It is now official - Ireland and Spain will exit their aid programmes in December 2013 and will not need to request any additional aid in the form of a preventative credit line from the European Stability Mechanism (ESM).
After the Eurogroup meeting on Thursday 14 November, Jeroen Dijsselbloem, the Eurogroup chief, congratulated the two countries, which have always demonstrated firm commitment to apply their aid programmes. He said that Irish and Spanish citizens have experienced difficult times, but he was confident that that would pay off. He said the two countries were examples of how the programmes can work as long as there is ownership at national level and rapid implementation of the measures laid down as a condition for financial aid. ESM Executive Director Klaus Regling said the eurozone's strategy of a combination of temporary aid and conditionality worked well.
Germany and Finland didn't want to give the general public in their countries the impression of being forced to continue to provide financial aid to two countries in convalescence, he added.
Under the Stability and Growth Pact, post-programme countries are subject to close surveillance in the form of follow-up missions every six months until they have paid back 75% of their loans (loans totalling €67.5 billion for Ireland and €41 billion for Spain). Dijsselbloem said that there would be monitoring, but no measures to be implemented.
The Eurogroup issued a statement welcoming the renewed investor confidence in Ireland thanks to the decision to increase the maturity of the loans and the decisive reform of the bank sector. It approved aid of over €20 billion which is more than Ireland's finance requirements for 2014, and welcomed the government's commitment to pursue reforms and respect its budget reduction targets (see EUROPE 10962).
Spain. The Spanish aid programme provided the cash needed to sort out the country's banks and ensure Madrid was able to borrow directly from the markets. The Eurogroup is pleased with the strengthening of the country's banks and the regulatory supervisory framework, but Euro Commissioner Olli Rehn stressed the need to complete reform of the governance of savings banks.
The eurozone finance ministers are pleased with the structural reforms being introduced in Spain and progress in consolidating public finance and reducing economic imbalances. They welcome the way this progress is being reflected in economic data, with a return to growth and restored market confidence.
Is it over-optimistic to see Portugal exit its aid programme as scheduled in May 2014? Lisbon is finding it difficult to apply its programme on time and to the letter, and would have preferred Ireland to have requested aid to help its exit rather than leaving Portugal to be the first country that might need to request the preventative aid. Dijsselbloem said he thought that the Irish and Spanish decisions would influence the decision in the offing for Portugal. Rehn said that Ireland was not a precedent and each country was judged on a case-by-case basis in the light of its own situation. (MB/transl.fl)