Update: Debates on Member States Leaving the Eurozone, 24th June 2015

QUESTION NO:   116

DÁIL QUESTION addressed to the Minister for Finance (Deputy Michael Noonan)

by Deputy Bernard J. Durkan

for ORAL ANSWER on 23/06/2015  

  To ask the Minister for Finance the extent to which the European Council of Finance Ministers is alert to the likely consequences of a prolonged debate on the future of any Member States leaving the Eurozone, for whatever reason; if it is understood that all Member States need to recognise their responsibilities in any such situation, and that countries, like Ireland, have already made huge sacrifices in order to ensure their own country’s viability and the well-being of the Union at large; and if he will make a statement on the matter.

REPLY.

Issues related to the euro area are dealt with by the Eurogroup, rather than Ecofin, although it is normal practice for the President of the Eurogroup to debrief colleagues at the Ecofin.

When Member States get into difficulties, there are a number of European financial assistance mechanisms available to help resolve these issues in order to preserve the overall financial stability of the euro area   . The euro area has an obligation to the Member States in these difficult times; Member States also have an obligation to reform their economy and return it to sustainable growth.

This is what was done in the case of Ireland and as a result we successfully exited the EU-IMF programme of financial support on the 15th of December 2013, and did so without the need for a pre-arranged backstop. The programme met its key objectives – to put the public finances back on a sustainable path, to restore financial sector viability, to restore Ireland to financial market funding and to raise growth potential. Similar steps have been taken by other Member States including Spain and Portugal.

I have stated before that I want Greece to remain in the euro area and that a nominal write down is off the agenda. However, there is – of course – some room for manoeuvre in terms of maturity extension and other ways to reduce the burden of debt. This is what we have done in Ireland, in cooperation with our European partners, with the extension of maturities on our EFSF and EFSM loans, the reduction of interest rates, the replacement of the promissory notes with long-term bonds and the replacement of IMF loans with cheaper market-based funding.

  A revised list of counter proposals was submitted by the Greek authorities yesterday. The Greek authorities will now work with the Institutions to come to an agreement by tomorrow that can be presented to the Eurogroup.

Even at this very late stage, there is still time for a deal to be agreed.   It is still in everyone’s interest that agreement is reached. The situation of Greece’s finances is very challenging with immediate financing needs to be addressed. In addition, deposit outflows have continued from the banking system. Therefore, urgent agreement on the necessary structural reforms is imperative to conclude the 5th review and release the associated disbursements.