March 14, 2011 / 4:51 PM / 8 years ago

Highlights: EU officials, euro zone finmins meet on crisis

BRUSSELS (Reuters) - European Union officials and finance ministers from the 17 countries that share the euro met on Monday to discuss details of an agreement among leaders at the weekend aimed at strengthening the euro zone bailout fund and resolving a year-long debt crisis.

The deal involves increasing the effective capacity of the bailout fund to 440 billion euros, allowing it to buy bonds in the primary market, and softening the terms of a bailout already made to Greece by lowering the interest rate and lengthening the maturity of the loans.

Following are some comments after their meeting.

EUROGROUP CHAIRMAN JEAN-CLAUDE JUNCKER

ON EUROPEAN FINANCIAL STABILITY FACILITY (EFSF) CAPACITY:

“We are discussing ways and means how to return to the initial level of 440 (billion euros). Will this be done by guarantees or could there be other means? My present feeling is that this will be done by guarantees.

“We have to discuss further details next week.”

“As part of the usual response, we continued our debate and discussions on the EFSF, including ways to ensure its effective capacity and that we can intervene on the primary market and that we can improve lending rates.

“As regards increasing lending capacity, as you can expect, we looked into various technical possibilities, including increasing guarantees. This is something that needs further discussion and more in-depth discussion.”

ON INTEREST RATES ON CRISIS LOANS:

“As regards adjusting the borrowing rates, the loan granted to Greece will serve as an example.”

ON PORTUGAL’S ECONOMIC PROGRAMME:

“We welcomed these additional measures because we think they are particularly bold and ambitious... They will allow Portugal to achieve the necessary budgetary improvements.”

ON ADDITIONAL EUROGROUP MEETING ON MARCH 21:

“Since there are various differences of view between member states ... I decided to reconvene the Eurogroup a week from today.”

ON GROWTH AND INFLATION:

“As usual we took stock of the economic and financial situation in the euro zone, including in particular the latest developments regarding inflation.

“On the real economy, the latest figures available confirm that there is a positive trend in industrial activity in the euro zone. We think that exports will benefit from the recovery of the world economy over the next few months and demand will continue to grow.

“The Commission and the ECB recently revised their growth projections for 2011. We also think that growth is well-diversified and therefore should be sustainable although there are some risks remaining.

“On inflation there has been a significant increase, reflecting the increase of the price of commodities. We are aware that we have to avoid second-round effects, which could give rise to a general inflationary trend in the medium term.

“We have agreed that we should keep a very close eye on inflation and we will be coming back to it at our next meeting.”

ON REGULATING RATINGS AGENCIES:

“There have been recent tensions on the sovereign debt market and these have been as a result of the decrease in the credit rating for Spain and Greece, so we had a request from the Greek Ministry of Finance to discuss the role of credit rating ratings, and we did that briefly.

“Many of the ministers were surprised with the timetable for adjustments and the analysis made.

“So, we said there should be a better regulation for credit rating agencies because we think this is particularly urgent.”

ON PORTUGAL’S ECONOMIC PROGRAMME:

“We made a joint assessment with the ECB on the fiscal and structural measures of the Portuguese government for the years 2011, 2012 and 2013 and we welcome and support these measures. Portugal deserves the trust of the market participants for the progress achieved to meet its fiscal targets and for the very concrete commitments to economic reform.”

ON STRESS TESTS FOR IRISH BANKS:

“We had a very good meeting with Finance Minister Michael Noonan this morning. It is essential that Ireland will complete the ongoing round of stress tests, which in Ireland has the deadline of the end of this month, the end of March. That will show the real state of the Irish banking sector.”

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