27/05/2013 - Statement

We had a productive exchange of views on European issues and the adjustment programme for Portugal.

As for European issues, we share the view that it is important to make progress on the deepening of economic and monetary union. One of the main challenges faced by the euro area is the fragmentation of financial markets. Therefore, we agreed on the need to deliver in a timely and consistent manner on all the elements of the Banking Union.

We also exchanged views on the positive development of the Portuguese Adjustment program, namely the progress on the seventh review mission and the recent agreement between the authorities and the Troika on a permanent spending-based consolidation effort that improves the efficiency and equity of the public sector. We agreed that an unwavering and speedy implementation of the agreement will be essential to sustain the high credibility the programme has enjoyed until now, despite often difficult circumstances. We agreed on the importance of a broad based political and social support, which has been a key asset for the Portuguese adjustment process.

From the side of the European partners, the agreement will allow the positive conclusion of the seventh review and in turn the extension of the average maturities of the EFSM and EFSF loans by seven years, thereby significantly supporting the government's endeavour to return to full market access. The gradual restoration of credibility has already contributed to significant improvements, as exemplified by the recent issuance of a 10-year government bond in May.

It is expected that the return of the sovereign to the market will contribute to improve the overall financing conditions in Portugal. Nevertheless, further efforts are needed to reduce the excessive cost of bank finance and improve firms’ access to credit, in particular for SMEs. While progress in the banking union will be important for this, other European mechanisms could be used to provide financial support, including the EIB.

We share the view that addressing financial constraints and promoting sustainable growth is crucial to address the key European priorities of creating jobs and reducing unemployment, especially youth unemployment.