J. Dijsselbloem: More major fiscal, structural reforms are necessary!

By Eurogroup Chief and Dutch PM Jeroen Dijsselbloem at the Eurogroup Press Conference on December 7

Good evening everyone and welcome to this press conference. I was going to say that we’ve had busier turnouts – looking at the audience tonight – but it makes sense, because we also had a short Eurogroup meeting.

Let me first make a couple of remarks on Greece, which was one of the countries discussed today (Monday). After successful implementation of the first set of milestones last month, today we took stock of the implementation of the second set of milestones. Which as you know are connected to the last sub-tranche of €1 bn. The design of the second set has been agreed by the EWG at the end of November. We called on the Greek authorities to implement these milestones as soon as possible and as agreed. The objective is to settle this by mid-December, so that we can focus on some of the major fiscal and structural reforms that are still open and need to be finalized for the first review early next year.

Recapitalisation of the four significant banks is almost finalised. We expect the last disbursement to be made tomorrow after approval of the ESM Board of Directors. Overall, a good success with significant involvement from private investors. The exercise will cost the programme less than €5½ bn, well below, as you know, initial estimates.

Secondly, we welcomed Danièle Nouy, the SSM chair. She joined us for one of our regular exchanges of views as part of what’s called the accountability arrangements for the SSM. She informed us on the execution of the supervisory work by the SSM, in particular the recent Comprehensive Assessments and the Supervisory Review and Evaluation Process (SREP), as well as on the SSM’s key policy challenges and priorities going forward.

We had a thematic discussion on pensions and pension reforms, which are central to fiscal sustainability in the euro area. Top of the agenda in many member states that have already enacted considerable pension reforms. But pension expenditure is still one of the main challenges for long-term sustainability. Alongside addressing pension expenditures, we need a range of policies to ensure that retirement incomes remain sufficient in the future. There is also a strong link, which was mentioned by a number of colleagues, to reforms on the issue of long-term care, the costs of care, which are also linked to the aging of our populations. And also reforms of the labour market, making sure that also all employees can still participate in the labor market. We will come back to those issues, the issues of pension reforms, over the course of the next year. We’ve asked both the Commission to come forward with some sustainability scenarios, also scenarios with more downside risks, to check whether stresses in our systems, and we’ve asked EWG to do more work on also the possibility of benchmarking pension reforms. So we will come back to those issues in a second round next year.

As I’ve said, we also discussed some country issues. A post-program surveillance of Ireland took place in November 2015. The institutions informed us about the main findings of the review. I don’t need to tell you all this. Very strong economic growth. Continued improvement on the fiscal and financial side. Overall an impressive performance by Ireland.

Two years after the end of the program, I think Ireland once again demonstrates that determined implementation of an adjustment programme can turn an economy around, to the benefit of citizens.

We also discussed Portugal, in a different way. We welcomed the new Portuguese finance minister, Mário Centeno, to the Eurogroup, and his state secretary Ricardo Mourinho Félix. The minister outlined the new government’s economic policy priorities and has assured us that he will come with a draft budgetary plan as soon as possible, probably at the beginning of the January 2016, for us to be able to discuss that with the Commission’s opinion in our February meeting. This is how I see it in the planning.

Finally one remark: we’ve come to an agreement on the constituency for the AIIB, the Asian Infrastructure Investment Bank. We discussed it last month, had a silent procedure; after that only Finland said that they can not enter in the constituency at this point, but the other countries will make a start with a eurozone constituency and we will now concentrate on setting up what is called a constituency agreement. Work will be done on that by the EWG. So that is very good news as we have an agreement for that.