1/ Quick overview of the #Eurogroup deal on #EMU reform. Pretty much in line with expectations. That it took the whole night to agree on a pretty modest package shows how difficult it has become to even get to minimal compromises.
Voilà the main features:
consilium.europa.eu/en/press/press…
2/ First on the euro area budget: Ministers say they will work on an instrument for convergence and competitiveness if the summit asks them to. BUT: Stabilisation not included in that potential mandate. Instead, no agreement at all here. Interesting that France agreed to this.
3/ On ESM reform: Ministers say they can prepare the amendments to the ESM treaty by June 2019 - if the summit asks them to. So this is for the heads to confirm. Good that there is a deadline, otherwise other decisions would have been rather meaningless.
4/ On substance, there is agreement on the backstop, including on possibly changing the IGA, which is the precondition that a backstop before 2024 would make any sense. ECB/SRB will assess progress on reduction of bad loans in 2020.
5/ They clarified the rules for getting precautionary assistance (PCCL) - and they got tougher, not easier. So far, respect of a country's SGP commitments was enough. In the future, in addition the country will need to have complied also with hard quantitative benchmarks.
6/ This means that even if the @EU_Commission assesses a member state as compliant with economic governance rules, a country does not autmatically qualify for precautionary assistance. Under the agreement, Spain out of scope (b/c of EDP), Portugal b/c of debt rule also rather out
7/ There is a commitment to introduce single-limb CACs, so to make debt restructuring more straightforward. Quite the concession by the Italians. Also ministers endorse the COM/ESM position on their division of labour, leaving main parts to COM.
8/ Finally, ministers "reaffirm the principle that financial assistance should only be granted to countries whose debt is sustainable" - except that this principle is nowhere to be found in the ESM treaty. Will be interesting to see what this means in terms of treaty language.
9/ To sum up: Very modest package, but with impressively little left for the heads. Only open issue seems to be the eurozone budget and the go-ahead for changing the ESM treaty. So glass half-full in terms of keeping the ball rolling. But glass more than half-empty on substance.
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