Mario Draghi, President of the European Central Bank -
Michael Noonan, Irish Minister for Finance -
Wolfgang Schäuble, German Federal Minister for Finance,
at the Eurogroup meeting on 29 November
© European Union, 2011
30/11/2011
On 29 November, euro area finance ministers endorsed the disbursement of further assistance for Greece, whereby the funds will be available by mid-December. Ministers also approved the terms and conditions to enlarge the capacity of the European Financial Stability Facility (EFSF) by introducing sovereign bond partial risk participation and co-investment funds.
Support for Greece
The Eurogroup decided to release the sixth instalment of loans for Greece worth 5.2 billion euros, under a programme agreed in May 2010. According to Jean-Claude Juncker, Chairman of the Eurogroup, prior actions for the release of the loan have now been completed, including a letter of support from the Greek Prime Minister Lucas Papademos and from the leaders of the main political parties in Greece stating their commitment to the parameters agreed on by the heads of state or government of the euro area on 26 October.
Mr Juncker said that the funds would be made available by mid-December, once the International Monetary Fund executive has signed off on its share at the beginning of December, bringing the total amount of this tranche to 8 billion euros.
EFSF levers
The ministers agreed on the terms and conditions for two options to leverage the resources of the European Financial Stability Facility as mandated by the euro area summit on 26 October. These two options are:
1. Partial protection certificates providing a protection of 20 to 30 per cent of the principal amount of a new bond issued by beneficiary member states.
2. Co-investment funds - a combination of public and private funding - to buy bonds of beneficiary member states in the primary and/or secondary markets.
"With the EFSF leverage framework now in place, the EFSF will be able to implement Option 1 in December and Option 2 in January", said Mr Juncker. "It will have full flexibility to use them, possibly in combination, in the most efficient manner."
He further explained: "We also agreed to rapidly explore an increase in the resources of the IMF through bilateral loans, following the mandate from the G20 Cannes summit, so that the IMF could adequately match the new firepower of the EFSF and co-operate even more closely with it."
"Leverage is a process over time", said Klaus Regling, head of the EFSF. "We only need to mobilise resources if and when we need to support a member state and when we use our new instruments."
Ireland: strong policy efforts
The Eurogroup commended the Irish authorities for strong implementation of the country's adjustment programme and cleared the way for the next instalment of financial assistance. A total of 8.5 billion euros is expected to be provided in January jointly by the EFSF, the EU instrument EFSM (European Financial Stabilisation Mechanism), the IMF and the UK. The decision on the share covered by the EFSM was adopted on the following day by the Ecofin Council.
More information:
Eurogroup press conference videos
Eurogroup webpages
European response to the debt crisis
EFSF press release: Maximising EFSF’s capacity approved