Eurogroup Flash Report - 22 May 2017 Discussion starts 16:15 Part ane ~ state of play on reforms COM (Moscovici): briefs on state of play with prior actions - 10 closer to 110 now since more done today). Huge effort made by authorities. Further 21 marked pending. Need final push to comp done by end of May. Areas where issues still open: labo bargaining (explanatory notes to legislation need revisi measures need to be assessed by GRECO, Council of Eur measures in coming days. ECB (Draghi): Also welcome the SLA, Importa bringing in IMF; now need to focus on imple has hurt growth, agreement has benefitted ¢ on markets, yields down. Swift im Also a plea to EL authorities to imple agreed in the context of the program: should be indemnified against all and their staff. ed position jslation v important. TAT that have been ormer ELSTAT presidents legal actions against them ESM (Reeling): A year si review, has been costly. Agreement on policy pai IMF (Thomsen): Also wel supplemented with debt measur legislation covers thre reform, constitutioi seeking legal opinio address problem s bargaining lanj actions to be fe can support with a programme if \ave only seven prior actions. Recent corrections needed on these ~ pensions t this raised by court of auditors, we are robustness of this reform and commitment to erturned. Gn labour market, collective ecific date for reversal, not agreed with us. Other d notbe problematic, EL (Tsak: a very big effort, is a very strong package, On ELSTAT, we are hapy ‘ome a key deliverable before July, Some drafting issues are small id much, eg. on collective bargaining. Happy to.address and able compromise, On NPLs, happy to address. Just to recall thal eed until everything isagreed, want to underline that Gre its side of the bargain and more than most expected. ents from floor. (Wieser): Once the issues mentioned have been addressed we will receive a mentation report and have pencilled in pravisionally a conference call for’6 June to discuss the final compliance report and full EWG meeting on9 June, 1Depending on what is agreed today, relevant national procedures could tal place in parallel so that ESM Board could take place in margins of Lux E meeting on 15 June, ECOFIN would take implementing decision on 16 J ESM Board of Directors would agree disbursement same day so that disbursement could take place in second half of June. But all this dey what happens on DSA and debt measures, which you will discuss, implementation report is the easy part, now we come to the mo! So Debt discu: PEG: IMF has made clear needs more specificity on debt t has made clear 1) we need to stay within framework of Maj decisions on debt relief would be taken at end of n COM (Moscoviei): 2% primary surplu: compliance w EU fiscal framework. framework; take on board relevant cor concessional character of EL debt; avoi Will expect El. to remain in preventivs ECB (Draghi): Agreement addressed on a permane adverse scenarios. Fully Based on credible baseline and plication of fiscal rules. ESM (Regling): Running numbers, confirm, May be in line with our scenarios, IMF (Thomsen): Und don’t think it is going addressed, Last 15/20%. That, ‘ou are proposing to proceed in this way, but way. Ignores a number of issues that should be a framework, based on GEN. An abjective - e shot (0 final calibration or approval or entry into force at this stage. also agreed that the Fund would need to be able to conclude that this ui -asures could allow for us to come on board, but we are not there to tell our board today on this basis that the conditions are in place: it agreed on primary surplus targets, nor on growth ie ied something considerably more specific or you will not yeree on this. We can live with the avoidance of haircuts and that means extensions of maturities not only for EFSF but also an facilities. | am very far away from being able to tell our lat we are close to a strategy that we can agree to. sakalotos): We think any proposal should be realistic and credible and send al to markets that Greece has turned a page and growth needs to be supported, needs to supply that clarity now. I think that if this is published as it stands, spreads will increase and Greek economy will suffer, We had verydifficult negotiation with IMF, which was given a veto by DE and NL. So | had a very weak hand. We have met IMF conditions and effectively have an IMF; programme. And we think that as such, now the ball is in your court. ! am appy to support any compromise. We will not mention QE...but a proxy for tHatisthat the markets get what they are expecting, and a compromise would be th: markets get a signal that Greece has changed. Investment is the re: economy is stagnating and to change that we need to give a sign: that Europe is not kicking the can down the road again. FR (Lemaire): Want to congratulate Greeks on the measuresad difficult that was. We want to support a compromise, but that nee on clarity, and we da not see that here. We have difficult assumptions, with maturities (we'd prefer 17 years); an‘ targets (prefer 2%). But main difficulty is that this does m whether the IMF is on board - and nat half on boat board, the ECB will not be able to provide QE. DE (Schauble): Quotes from May 16 statemer needed” etc, DE law is that any DE finmin ha} programme without a mandate of th advance, Cannot MF that at beginning of 750bn of which 500 from EA programme always and Wve to negotiate a new programme, and that w Statement goes a long wa! beyond what we agreed. Not ac compromise. | have ng find a solution. reports on the significant efforts made by Greek ard for Greece. Markets waiting for signal. ye why we cannot agree on this. Fourth, I would like to ir reaction to the paragraph about the role it could play. ept the view that there is no possible room for discussion on pic. mir): I did not expect to be back here to discuss debt measures quite so 1 hii want to be constructive. We have all made mistakes including IMF: or ould not be here. What matters here for us is that none of these measures ve a negative impact on EFSF and ESM. Now, on growth - are we reallysaying EL is not expected to grow by more than 1% for so many years? This alchemy but this is not my alchemy... IMF (Thomsen): Perhaps was not sufficiently clear. My problem is that statement further restricts the universe compared to May 2016. | think respect the main principles, no haircuts, no transfers, but this furth: us. I think we need to go beyond the universe of measures forese restricts it. str thet PEG: Let me explain, May 2016 did not only specify what could ni also what could be. And there are constraints there. It's not open-et is that there is a maximum programme authorised amo parliaments and ask to increase EFSF guarantees ~ NL patliament e 1 re are will assess what . We spent accept that | can tell you. On growth, we have not put this different assumptions. We have addressed this wht is needed based on an IMF DSA, ie. based onan IMI AT (Schelling): IMF told us DSA was not cred jures. Now still not credible? 1% growth over 4 jint of the programme? We agreed this progra ation the IMF would ng on boar or not? Cannot be wy dan't we make a bet? IF Pf you are right, you pay discussing new measures every fou COM is right, you pay doubl nothing because you are jake this bet, but yau will lose. Si: Cannot go beyond M: \t. also the part of that statement that there would be no except non some MS is missing from this one. PEG: This does not r recment, it builds on it, May statement is valid. ESM (Regling): At re could be an additional interest deferral by up ta 2037. ( irgue that this is not very far reaching underestimates the impact of this. How to square this circle? Different involvement of IMF? ‘essary condition but see that it is for athers. What about the programme w IMF in advisory role? You cannot be 50% pregn: seems to be that now, can have a short break and then discuss specifics of the statement. But ue is that our various constraints don’t seem to allow us to close today. think that we can take a major step today: 1) giving more clarity on what based on IMF, And | will ask IMF also to take a big step and take aprogrammeto the board..even if it cannot disburse before the debt question is: resolved. IMF (Thomsen): This is an interesting proposal which we can conside to board with a programme and disbursing later. I can raise this with management but then let's not constrain this more with further if we cannot get an agreement now, let’s not specify some variab] others. EL (Tsakalotos): Always understood that for you to go to board to have debt that is sustainable, so I don’t understand this new p it is‘a possibility, then it is the worst of all worlds for ELUBecause it mean have negotiated very tough programme thinking IMF w« debt is sustainable and allow EL to turn the page. | don’t IMF in on one bit but not the other bit. Their partici them saying our debt is sustainable. IMF (Thomsen): Let me explain. We have in the p: principle, when we have agreement ania poliey pi but we do not have financing in pla once that is done it helps catalyse what about the DSA, not financing flows. then let's not limit the universe of p Euclid says, why this woul but the fact is that we don't seem to be converging o ink is good, gard in principle and then 2 .e financing, Here it is plore this, itis interesting, But PEG: In my mind this we ig question mark, not give clarity to markets. FR (Lemaire): Do not likelthis lac rity. We do not need a rollover process, we need clarity. {hay from our new president to accept clarity, not a rollover process. PEG: Undertsa to provide more clarity because we still cannot provide full clatity. If jock heads together and get one figure, that would be great, but not yet managed. So we could make progress but not have the full d ich we never promised anyway. er 4 hours: not acceptable to Greece, Will give floor to Euclid to explain in explain how I propose to proceed, including by taking back all the two drafts of the statement circulated. Jotos): Have had lots of conversations including w my PM, appreciate ‘to find common ground but have to say | am disappointed. We have iuge efforts as part of anarrative and that narrative is now not on thetimetable. This document has a lot of things that could work for the Greek economy and Greek debt sustainability but if one institutions says this dog@inot say our debt is sustainable on this basis then the markets do not have the¢larity they need. So let's take some more time. You have my personal commit at the work to complete the prior actions will continue, We need this time to to terms with what is on the table and work to improve it. IfT signe now there would bea major political cri happen I need to take time to think about it, thi PEG: The only conclusion | can come to tonight is that we have m. progress on the policy package, and that EL will continue lost and we will work towards a disbursement in the su! will continue to work in the coming weeks and that at th will try to conclude. [am personally committed to work ha to be clear that reaching a full and comprehensive everyone is not possible. It is not passible. t Eurdghoup DE (Schauble): Let's have no illusion. This is been that we needed clarity today, some oth clear statement in 2016 and the nai on medium term measures today — not very optimistic that things will impro we had at hand today. Lesson to lear not try to. change the narrative with because some of us moves failed. I'm sorry. ‘would geta decision May 2016.1 am not a better solution than difficulties in adopting the expressed by Wolfgang, some MS Je to make a similar positive move in the ‘ad job and I hope that this work will not be fora compromise. Hope that we will be able to jeeting tonight, important for markets. lost because we hav communicate positi rimate what has been done tonight, measures case help the Greek economy. A political crisis in Greece ncial crisis and those when they start we do not know how th that we can conclude in three weeks and that IMF can We are all members of the [IMF and there is an these views in the IMF board. disappointment and need to work to close gap in coming 1g options or tempering expectations.