Good afternoon. Today we had a relatively short, but diverse agenda and a rich discussion on the future euro area budgetary instrument – a topic we will come back to at our next meeting.
But let me start with a few appointments.
Today we welcomed Jānis Reirs, the new Latvian finance minister following the election of a new government in Latvia. Janis is already familiar with the Eurogroup as this is not his first time as finance minister. He informed us of his government’s policy priorities.
We also agreed on a nominee for the upcoming ECB Executive Board vacancy – that of Peter Praet, whose term ends on 31 May.
We have received one candidacy from member states, which was put forward by Ireland. The Eurogroup unanimously agreed to endorse Philip Lane, Governor of the Central Bank of Ireland for this position.
As noted by several ministers today, Philip is really an excellent choice for this position. He is a highly trained and respected economist. I’ve known Philip for many years and am very happy to endorse him.
Tomorrow the EU finance ministers at the Council are expected to formally adopt the recommendation to the European Council. The ECB and the European Parliament will be consulted and the final decision will be taken by the Leaders, most likely in March.
We also discussed today the post-programme surveillance of two member states: Ireland and Portugal. In both countries the crisis is a distant memory. We were debriefed by the European Commission and the ECB on the main findings of their missions, which were carried out in November. The ESM also presented its findings under its Early Warning System.
On Ireland, we continue to see a strong economic and fiscal performance. We encouraged Ireland to continue pursuing sound policies to safeguard the Irish economy against downside risks, such as Brexit.
On Portugal, we also see a good economic and fiscal performance. Current reforms need to continue to further reduce public debt and raise potential growth.
I will let Pierre and Klaus expand a little bit more on the conclusions of both missions.
We also had a discussion based on the latest economic forecasts presented by the Commission. There is a mixed picture. Ministers took stock of where we are in the economic cycle. On average, there is a slowdown in the pace of growth, but the economic fundamentals are still solid and the euro area is growing, creating jobs and increasing investment.
Risks dragging down growth are mostly political. This calls for action, both to unwind them but also to pursue the necessary reforms at the national and European levels to protect our economies from these risks.
Finally, we had a first dedicated exchange of views on the budgetary instrument for convergence and competitiveness. Leaders mandated us to outline the key features by June.
We agree that the goal is to support potential growth, and to enhance the resilience and adjustment capacity of our economies. Today we discussed two possible ways to achieve that: (i) strengthening investment, particularly public investment, and (ii) supporting structural reforms.
We also considered various options related to funding and governance. The leaders clearly envisaged a role for the euro area member states, in terms of strategic guidance and setting the criteria.
The challenge is to articulate this role within the context of the EU budget, in a legally and institutionally sound manner. The sources of funding of this instrument and its governance model are the key to its success.
All in all, it was a substantive discussion but we need more work on these aspects in the coming meetings.
You all remember this was a controversial topic in December, but we are in a new phase now. The instrument was agreed by Leaders and now we need to flesh out the details. The attitude around the table is constructive and I am sure we will come to an agreement in time for June.