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22.11.2013

Eurogroup statement 

The euro area is making its way out of the crisis as the signs of
economic recovery are becoming more visible. We are convinced that the
closer coordination of Member States' fiscal policies in the framework
of this new exercise will significantly contribute to the strength and
cohesion of the euro area. 

Against this background, we welcome the first round of this new
coordination process, established by the Two-Pack Regulation on the
strengthening of budgetary monitoring. This exercise constitutes an
important step forward for economic and fiscal governance in the euro
area. It allows for a considerable strengthening of the coordination and
surveillance of budgetary policies within the euro area and also further
enhances the transparency of Member States' budgetary policies. We also
welcome the dedicated manner in which the Commission has taken up its
role in providing in-depth opinions on all draft budgetary plans and on
the assessment of the budgetary situation and prospects of the euro area
as a whole.

We engaged fully in this new coordination exercise by having an in-depth
and frank debate on the draft budgetary plans for 2014 and the overall
situation in the euro area, allowing scrutiny by euro-area peers. We
broadly concur with the Commission's opinions and analysis and we will
take into account the concerns raised by the Commission opinions in our
budgetary processes.

Years of fiscal consolidation in the euro area are now bearing fruit.
The government deficit, already close to 3% of GDP in 2013, is expected
to fall below it in 2014 and the aggregate debt level will stabilise,
which allows fiscal policy to be supportive of the nascent recovery.
With that, both the debt and deficit projections for the euro area are
considerably more positive than for other major economies, including the
United States and Japan. Setting correct priorities for fiscal policies
will lay the foundations for improving our growth performance. 

In parallel to these fiscal consolidation efforts, we recall the
importance of a simultaneous strong implementation of the structural
reforms recommended in the context of the European Semester, in order to
provide a sound foundation for returning to sustained growth. We
therefore welcome the attention paid by the Commission to the monitoring
of progress in this area. We commit to pursue the implementation of
growth oriented structural reforms and invite the Commission to continue
its close monitoring.

We welcome that the planned or announced fiscal effort, respectively,
for 2014 is broadly appropriate, including in its differentiation
according to fiscal space. At the same time, we stress that this is not
the time for complacency. We recall that it is important for all Member
States to ensure the sustainability of public finances. The Member
States in the preventive arm of the SGP, which have already achieved a
deficit below the 3% of GDP threshold, should ensure an appropriate
convergence towards the MTO and a continued respect of the debt rule.
The other Member States, in the corrective arm of the SGP, should ensure
a timely correction of their excessive deficit and appropriate
convergence towards the MTO thereafter, as well as continued respect of
the debt rule. 

The Eurogroup welcomes that no draft budgetary plan was found in serious
non-compliance with the obligations of the SGP and that consequently no
resubmission of a DBP was requested by the Commission. We take note of
the fact that Germany and Estonia are assessed to be compliant with the
SGP. Still, we recognise that, for a number of Member States, compliance
with the rules of the Stability and Growth Pact is at risk.

We therefore invite those Member States whose plans are at risk of
non-compliance with the rules of the SGP to take measures as appropriate
within their national budgetary processes or in parallel to that, to
address the risks identified by the Commission and to ensure full
compliance of the 2014 budget with the SGP rules. Against this
background, we welcome their full commitment to address this risk and
take note of additional measures:

 which have recently been taken in the case of Malta; 

which are in the process of implementation in the case of Italy, which
is in the preventive arm of the SGP;

which are based on the National Reform Programme and are under
preparation in the case of Spain;

which will be announced shortly in the case of Finland, which is in the
preventive arm of the SGP and is close to the MTO. 

We take note that in the case of Luxembourg the risk of non-compliance
with the preventive arm of the SGP stems from the absence of a
full-fledged draft budget for 2014, which will be submitted by the newly
formed government.

We therefore invite those Member States whose plans are broadly
compliant with the rules of the SGP (Belgium, Austria and Slovakia) to
ensure full compliance with them within the national budgetary process
and welcome their commitment to take compensatory measures if required.

We therefore invite those Member States whose plans are compliant with
no margin for deviation (France, Netherlands and Slovenia) to implement
their budgetary plans rigorously and to prevent the occurrence of
slippages that would endanger compliance with the SGP rules.

We look forward to the Commission assessment of the additional and
announced measures. We also look forward to the Commission assessment of
the updates of the draft budgetary plans of those Member States which
are in the process of forming governments.

Lastly, as pointed out by the Commission, it is key that Member States
focus more on the quality and composition of the adjustment, in order to
ensure that our policies are as growth-friendly as possible. This
implies that the share of investment in public expenditure should
increase in future years. Therefore, we commit to focus more on the
growth-friendliness of fiscal policy and on the implementation of
structural reforms, including fiscal ones, as reflected in the
country-specific recommendations addressed to us by the Council in July
and in the euro area recommendation. 

We also recall that the Member States with a macro-economic adjustment
programme, which were not assessed today, have also shown progress with
respect to fiscal consolidation, even though they obviously have
considerably less fiscal room for manoeuvre than most other Member
States. They have also progressed with the correction of imbalances and
restoring the foundations for growth. We call on these Member States to
continue addressing with resolve the challenges as identified in the
respective programmes.

We will continue monitoring closely euro area Member States' fiscal and
economic policies, as well as the aggregate fiscal stance for the euro
area as a whole to ensure a growth-friendly, differentiated and sound
fiscal policy on a regular basis.