Euro zone finance ministers and officials met on Monday to discuss the crisis in the euro zone, including speeding up work on their EFSF bailout fund and the situation in Greece and Italy.
Following are highlights of comments from the Eurogroup meeting:
SPEAKING AFTER THE MEETING
EUROGROUP PRESIDENT JEAN-CLAUDE JUNCKER
ON ECONOMIC MONITORING:
We agreed that enhanced monitoring of vulnerable member states is a fundamental part of the firewalls that should be in place to contain the crisis. While all member states should continue to implement their policy of fiscal consolidation and structural reforms, a particular effort will be required of member states experiencing tensions in sovereign debt markets.
In that respect, and it took some time, we discussed the situation in Italy and welcomed the series of new measures recently announced by the Italian authorities, which include balancing the government budget by 2013 and readiness to take additional measures if needed, in pension reform, deregulation and labor market reforms.
We welcomed the European Commission's decision to intensify its monitoring of the Italian economy... in cooperation with the European Central Bank. We also welcomed the decision of Italy to invite the IMF to carry out a public verification of its policy implementation on a quarterly basis.
ON INCREASING IMF RESOURCES FOR EURO ZONE LENDING CAPACITY:
Following the declaration of the G20 leaders in Cannes, we briefly discussed the possible ways to increase the IMF resources in order to increase its lending capacity toward euro area member states and possibly increase the leveraging potential of the EFSF. Work is ongoing in this area and we'll certainly have to review this again. As mentioned in the Cannes communique, work is expected to be concluded by the next G20 ministerial meeting probably by mid-February 2012.
ON BOOSTING THE EUROPEAN FINANCIAL STABILITY FACILITY (EFSF):
I was told that I should forget about a special purpose investment vehicle (SPIV) and the new wording is a co-investment fund.
The EFSF will now consult in order to come up with the most effective arrangements. We intend to finalize the work of the operational details of the two options by the end of November in the form of guidelines that will be approved by the Eurogroup so that implementation can take place in December.
ON FIREWALLS TO AVOID CONTAGION:
We agreed that enhanced monitoring of vulnerable member states is a fundamental part of the firewalls ... to contain the crisis.
A particular effort will be required of member states experiencing tensions on sovereign debt markets.
EU Economic and Monetary Affairs Commissioner Olli Rehn
It is essential that the entire political class is now restoring the confidence that had been lost into the Greek commitment to the EU/IMF program.
We have been calling for a coalition government of national unity, which is currently in the making.
It is essential that the new government... will express a clear commitment on paper, in writing, to the EU/IMF program and its elements including the second program.
We will work with the new government once it has made this clear commitment.
I believe it is possible that the sixth tranche can be disbursed in the course of November on the condition that there is a clear and unequivocal commitment by the new government and that it expresses its clear will to work toward a second program.
As regards Italy, Finance Minister (Giulio) Tremonti reassured us on the determination to proceed quickly with the implementation of measures in the letter from the prime minister of Italy to the euro area summit on the 26th of October.
I have signed a questionnaire last week and we expect that the Italian government will respond to these very specific questions with regards to the implementation of this program by the end of this week.
It is crucial to implement the fiscal policies as outlined in the letter of the prime minister and accelerate structural reform ... this is now the main task of Italy.
LUXEMBOURG'S FINANCE MINISTER LUC FRIEDEN
The measures being taken by Greece and by Italy are going in the right direction.
SPEAKING BEFORE THE MEETING
WILL THE IMF BE INVOLVED IN EFSF LEVERAGING:
There are several option on the table. The EU has appropriate instruments to do it itself, but in general I think the cooperation between the IMF and the European Union has been excellent, so I don't mind if on some issues we closely cooperate with the IMF.
WILL IMF INVEST IN THE EFSF OR A SPECIAL PURPOSE VEHICLE?
That is one of many options.
FINNISH FINANCE MINISTER JUTTA URPILAINEN
I think today is a day of discussions, not making decisions, but we will see.
On Italy: I think that the situation in Italy is quite serious.
AUSTRIAN FINANCE MINISTER MARIA FEKTER
ON OPTIONS FOR BOOSTING THE EURO ZONE BAILOUT FUND, SUCH AS IMF SPECIAL DRAWING RIGHTS (SDRS):
There will be three options to be discussed and we will look at what they are meant to look like.
One is bilateral increases, the other is SDRs and the third a mix of more SDRs from all states.
It's about the IMF making a bigger contribution.
Gold is not even up for discussion.
I do hope they can free themselves from the current difficulties.
I am confident we'll insist that all opposition parties will sign up to the reform package and do so in writing and that the reforms are started immediately and not after elections.
Only once we have this certainty from all political powers in Greece the next tranche can be paid out.
DUTCH FINANCE MINISTER JAN KEES DE JAGER
ON EUROPEAN FINANCIAL STABILITY FACILITY (EFSF):
There are several options on the table to increase the capacity of the emergency fund. The Netherlands thinks it is very important to increase the capacity and to increase the credibility of the fund. But there are several options with disadvantages, several options with more or less disadvantages. So we have to do it either way.
In principle we agree with the... conclusion that we have to increase the capacity of the emergency fund, that's very important but it's not the only thing.
Economic reforms and budget cuts in countries currently under attack from the financial markets are at least as important as more money in the emergency fund.
ON ENDING THE EURO ZONE CRISIS:
We have always said this is a crisis you cannot solve quickly, it took years to build up to this and we must all help to repair the damage with painful reforms in many countries in Europe.
IRISH FINANCE MINISTER MICHAEL NOONAN
ON EUROPEAN FINANCIAL STABILITY FACILITY (EFSF):
The proposals to leverage up the firewall protection of the EFSF are quite good proposals, but of course it will take time before the technical work is done to make that happen.
In the meantime and in parallel, the ECB has a role it must continue to play until the EFSF firewall is put in place, whenever that may be.
Even when that has been put in place, it is going to be tested, so I think the ECB must carry out a parallel function until it is quite clear that the new firewall is doing its job.
GERMAN FINANCE MINISTER WOLFGANG SCHAEUBLE
In Greece the developments are cataclysmic. Every day a new situation. Greece must assure that what has been agreed can be implemented by Greece.
In the current situation it is very important that not only the government... but also the opposition stand by the commitments. Those conditions must be fulfilled.
The program's conditions must be met before we can decide about the payment of the tranche.
Italy is not in a comparable situation. The real numbers from Italy do not justify the nervousness in the markets.
EU ECONOMIC AND MONETARY AFFAIRS COMMISSIONER OLLI REHN
ON ARRIVAL FOR EUROGROUP MEETING:
ON SITUATION IN ITALY:
It's essential now that Italy will stick to its fiscal targets, ensure their implementation and intensify the structural reforms that can boost growth and job-creation.
It's important that in fiscal policy, Italy... (ensures) that all objectives will be met, while in the structural reforms there is more room for being (on the) offensive and taking more courageous decisions, in order to boost growth and jobs in Italy.
SPEAKING EARLIER TO EUROPEAN PARLIAMENT COMMITTEE:
ASKED IF THERE WAS A EUROPEAN COMMISSION STUDY ON HOW A COUNTRY COULD LEAVE THE EURO ZONE:
There is no such study.
Of course the Commission, like any organization that has responsibilities over the welfare of people, in this case the welfare and future of Europe and European citizens, they have to do scenario planning and we have to be prepared for all kinds of scenarios. But there is no such study as to which you are referring.
We want to ensure that Greece can and will stay in the euro.
ON MONDAY'S EUROGROUP MEETING:
(Today's) meeting takes place at a very critical juncture after the unraveling of political events that are still taking place in Greece.
We remain committed to support Greece... but the least we can now expect is that Greece sticks to those very decisions she has herself called for and committed to. This is essential, absolutely crucial for us to move forward.
So we have called for a national unity government and we remained persuaded that it is the only convincing way of restoring confidence and meeting the commitments.
I met with (Greek) Finance Minister Evangelos Venizelos earlier today here in Brussels and I trust he will report to the Eurogroup on the rather speedy process toward a coalition government of national unity in the next days.
Italy asked the IMF to monitor its commitments. The Commission on its part will go ahead with a detailed assessment... We will send a mission to Italy this week.
GREEK FINANCE MINISTER EVANGELOS VENIZELOS
After a difficult week, we now have a new political situation, a political frame in Greece.
We have a new government of national unity and of national responsibility. This is the proof of our commitment and of our national capacity to implement the program and to reconstruct our country.
EUROGROUP PRESIDENT JEAN-CLAUDE JUNCKER
ON ASSISTANCE TO GREECE:
I don't think that we will have final decisions today. We'll of course discuss the sixth disbursement, but it depends on the answers we'll be given by the Greek government in order to know if yes or no we'll release the sixth disbursement today. But anyway... the financial need will appear only around mid-December so we have some time to assess this question.
ON SITUATION IN ITALY AND ITS PROPOSED BUDGET REFORMS:
That depends on the answers the Italian government will deliver.
I don't expect any decisions to be made today. We have to learn about the exact situation in Greece today and also speak about the intentions of the Italian government.
(Reporting by John O'Donnell, Jan Strupczewski, Annika Breidthardt, Luke Baker, Robert-Jan Bartunek, Robin Emmott, Ben Deighton and Rex Merrifield)