The creation of the bailout fund has allowed the eurozone to preserve financial stability and the five countries that have benefited from it to improve their macro-economic situation and, with the exception of Greece, to finance themselves again on the financial markets, the Tumpel-Gugerell group of experts concluded in a report on the European Stability Mechanism published on Thursday 15 June.
The firebreak has worked and has been an important success, said Gertrude Tumpel-Gugerell, who was tasked with steering the work of the experts to assess the effectiveness of the bailout plans of Greece, Ireland, Portugal, Spain and Cyprus for a total envelope of €300 billion (not including the third Greek bailout plan).
The former board member of the ECB said that when aid plans are drawn up, it must be ensured that they respect the political legitimacy of the measures recommended and increase the ownership of them by the countries on financial life support. She argued that right from the very beginning, a bailout plan must tackle the consolidation of the national financial sector, as around 50% of the aid envelope is usually earmarked for this. It must also set in place an appropriate timetable for the concretisation of the structural measures imposed in exchange for financial assistance.
The report also notes that certain instruments, such as direct bank recapitalisation, are too complex to be used. It also recommends improving the transparency of the bailout plans by means of compulsory public reporting (e.g. the creation of a public database).
On behalf of the ESM, the president of the Eurogroup, Jeroen Dijsselbloem, said that the permanent bailout fund of the eurozone would adopt many of the recommendations contained in the report. The question of bringing the ESM, which is currently based on an intergovernmental treaty, into the Community scope was not dealt with by the report, but could be covered by subsequent discussions between eurozone countries on the governance framework of the financial bailout plans, he noted.
The director general of the ESM, Klaus Regling, who firmly believes in the success of the approach involving financial support made conditional on structural reforms, has announced that Spain has paid back €1 billion early, an operation that mechanically reinforces the strength of the financial firebreak. Cyprus and Portugal plan to do the same for certain loans granted by the IMF. (Original version in French by Mathieu Bion)