The EU Finance Ministers of the Twenty-Seven (all except the UK Minister) were still negotiating on the proposal for a detailed fiscal capacity architecture for the euro area and on the reform of the statutes of the European Stability Mechanism (ESM) on evening of Thursday 13 June in Luxembourg.
The announcement of a possible global agreement was no longer expected until Friday morning at the earliest when we went to press.
On Thursday evening, the ministers discussed only the reform of the statutes of the ESM, the permanent bailout fund for the euro area, on the basis of the mandate given by the Heads of State or Government at the end of 2018 (see EUROPE 12160/1). Among the points under discussion was the issue of public debt sustainability as a condition for a solvent State in budgetary difficulty to have access to the precautionary instruments offered by the ESM (PCCL and ECCL credit lines).
Berlin apparently pushed for such conditionality to be enshrined in the treaty establishing the ESM. Discussed at a quadrilateral meeting between the President of the Eurogroup and the French, German and Italian ministers, a compromise solution could be to mention this conditionality in the annexes of the text.
An agreement on the revision of the ESM was almost finalised, according to one source, with Estonia being the only country still resisting.
Regarding the future fiscal capacity for the euro area, several issues remained to be addressed, including the nature of the investments and/or reforms supported by this instrument, how these would be financed and governance. The differences in interpretation remained significant.
However, the stated objective remained to reach a final agreement, so that the euro area summit only had to approve it on Friday 21 June. EUROPE will revisit this. (Original version in French by Lucas Tripoteau)