I will start by saying a word on the most important operational decision that we took this morning: the disbursement of almost 1 billion euros to Greece.
This decision was prepared by intensive and not always easy discussions between the institutions and the Greek authorities, also inside the Euro Working Group. It will be formalised once the national procedures have ended. It has been made possible due to the positive outcome of our Enhanced Surveillance Report that we updated this week in the College meeting on Wednesday, in order to take into account the measures taken since February which were necessary because at this moment we took stock of huge progress but also pointing some outstanding issues.
Since then, Greece has taken such measures in order to reinforce tax administration, to help moving to some important privatisations and in particular, to conclude the Katseli law reform in order to protect primary residences in insolvency situations.
This particular law has a target, which is to protect the most vulnerable without undermining the capacity of the banks to restructure their non-performing loans, which is a heavy burden not only on Greece but also on the European economy.
We insisted this morning on that fact that this should be and that it is a temporary measure and the Commission will closely follow and monitor the implementation of this measure in the framework of the Enhanced Surveillance Report. Mr Tsakalotos, the Greek minister, confirmed that it was the case, this measure is temporary and has to be.
All in all, Greece has done what was necessary to respect its commitments and I think that the decision taken today by the Eurogroup gives a new and very strong signal to investors, to markets, that this country is in the movement, in the process, in the way forward to reform and modernise its economy on the one hand, and its European partners keep on supporting and are alongside Greece in its movement.
We all tried these years to make the Greek issue a success story and today is one more step in that direction. I am very satisfied with it.
We also exchanged this morning with the President of the ECON Committee of the European Parliament, Roberto Gualtieri, in the framework of an initiative that you took Mario, to bring closer the European Parliament to the work of the Eurogroup. It is a preview of what should happen in the future to have a euro zone finance minister controlled by the European Parliament. We are not yet there. I fully support the initiative you have taken at least to organise a strong dialogue with this Committee. We have led, as institutions, such a dialogue in the last four years, it will be the last time that Roberto comes in that function during this mandate. The Committee has made a strong work.
This meeting has been the occasion to discuss together the last economic developments in Europe and the challenges we need to face in a context where growth is slowing down growth and where downside risks are important. We are going to discuss that next week, also in Washington, in the framework of the IMF meeting. We must prepare our mindset to any kind of response that might be needed even if I believe the fundamentals of the European economy remains solid. We are now closer to potential growth and we must take that into account.
And against this more fragile economic backdrop, it is particularly important that we send a strong signal that progress is being made to make the Economic and Monetary Union more resilient. As Mario said, today we continued to discuss the proposed budgetary instrument for competitiveness and convergence, concentrating this time on aspects related to its governance.
I believe there is broad support emerging on the main governance features of the budgetary instrument.
I will highlight three specific aspects we discussed today which I consider particularly important:
First, we favour a strong link between the strategic guidance to euro area Member States and the European Semester. In particular, a strengthened Euro Area Recommendation could be the vehicle to provide such strategic guidance on future priorities. Reporting and monitoring could also be firmly anchored within the Semester surveillance framework to avoid duplication of processes and to ensure consistency.
Second, how to keep the instrument sufficiently flexible and agile so that it can address emerging challenges and policy priorities, as well as country-specific situations. Here we need to strike the right balance between setting out clear ex ante provisions and conditions to provide predictability – and not over-specifying conditions ex ante in a way that would limit the ability of the instrument to provide rapid and flexible support.
And third, how the instrument can be adapted to the economic cycle, for instance by modulating the balance between EU and national co-financing so that the former increases in the event of a downturn. Because if a reduction of national co-financing is not compensated by an increase in the EU co-financing, this would result in a counterproductive and pro-cyclical cut of investment. Total spending would decline, which would be the opposite of the intended effect. The cyclical situation today underlines the relevance of this aspect!
In short, we are making useful progress in this discussion, which is not simple either from a political or technical point of view. It is however fundamental for delivering a stronger and fairer Economic and Monetary Union. Time is pressing, given that all the key features need to be agreed in time for the next Euro Summit in June. I won’t talk about Brexit. Just to recall that the Commission showed two days ago that we are prepared to a no deal, also in the field of customs, which would be one of the most delicate in this case. We are ready to re-establish controls if needed, but obvisoulsy this not the case we prefer. There will be next a very decisive European Council in order to see the way forward.