Completed support programmes
A financial assistance programme consists of a package of agreements made between the European Commission and the member state asking for support. Financial assistance is provided by emergency funds. Since 1 July 2013, the European Stability Mechanism (ESM) has been the only emergency fund from which new support programmes can be financed. Before that date, this was also done by the temporary European Financial Stability Facility (EFSF). Below you will find information on the current state of the financial assistance programmes as at end February 2020.
Programme for Greece
On 25 September 2017, the Ecofin council decided to end the ‘excessive deficit procedure’ for Greece as the country was found to have sufficiently reduced its budget deficit. Greece received the final tranche of €8.5 billion at the end of October 2017. Including this payment, Greece will have received loans totalling €273.9 billion under the three financial assistance programmes. Of this amount, €182.0 billion was disbursed from the EFSF and the ESM, and €91.9 billion from the IMF, the Greek Loan Facility, and the EFSM.
On 21 June 2018, Greek government finances were found to be sufficiently robust to end the assistance programmes after eight years. To be certain, Greece has built up a cash buffer with the help of the loans received to ensure that the country will not immediately run into problems again in case of adverse developments. Since 20 August 2018, Greece has been able to tap the government bond markets independently again.
Greece will start repaying the GLF loans in 2020. The EFSF loans will be partly repaid from 2023, with the bulk of repayments following after 2049. The ESM loans will be repaid from 2034.
Programme for Ireland
The EU and IMF’s emergency financial assistance programme for Ireland, implemented between 2011 and 2013, was completed after three years. At end 2013, the Eurogroup announced that Ireland had implemented the required restructuring programme and fulfilled all the conditions set. With its accumulated cash buffer of €20 billion, Ireland will not require further emergency assistance. However, under post-programme surveillance, the European Commission and the IMF will continue monitoring the continuation of austerity measures and the general developments in the country for years to come, until at least 75% of the loans have been repaid by 2031. In 2042, all loans totalling €62 billion must have been repaid in full.
Programme for Spain
The EU programme for emergency financial assistance to Spain was completed on 31 December 2013. At end 2013, the ESM announced that Spain had successfully implemented the required restructuring programme. The loans disbursed to Spain must be repaid in full at the end of 2027. Presently, Spain has paid back €17.6 billion, of which €16 billion in early redemptions. Spain received €41.3 billion in total, of which €23.7 billion is still outstanding.
Programme for Portugal
The programme for financial emergency assistance to Portugal of the EU and the IMF ended on 30 June 2014. The Eurogroup on 5 May 2014 announced that it agreed with the Portuguese government’s opinion that the country would be able to stand on its own feet again and would not ask for the programme to be extended. Portugal is now under post-programme budgetary surveillance by the European Commission and the IMF. Based on the ‘Two-Pack’ regulations, the two institutions will continue monitoring continuation of the measures taken under the programme and the general developments in the country.
The loans will be repaid between 2025 and 2040. In 2019, Portugal made a voluntary repayment of €2 billion. Today, €74 billion is still outstanding.
Programme for Cyprus
The EU and IMF financial assistance programme for Cyprus ended on 31 March 2016. Thanks to successfully implemented reforms Cyprus took out €7.3 billion of the €10 billion loan agreed three years earlier. The country no longer needs the remainder of the agreed loan. The country is under surveillance from the ESM, which will ensure that the loans will be repaid between 2025 and 2031.
The majority of financial instruments are either provided by the (then) 28 countries of the EU, or by the Eurogroup of 19 euro-area countries. For instruments used based on EU decisions, there is an automatic role for the European Commission and other European institutions. This has been arranged under the Treaty on the Functioning of the European Union. In the case of instruments deployed on the basis of decisions by the 19 euro-area countries, there does not necessarily have to be a role for the European Commission and other EU-institutions. The 19 euro-area countries decide on a possible role for these institutions for all individual instruments. If they decide in favour of such a role, the role is laid down in intergovernmental agreements between the 19 euro-area countries. In addition to the financial instruments deployed by instigation of the EU or the euro area, there are supplementary instruments:
- bilateral support between countries;
- purchasing of government bonds by the European Central Bank (ECB);
- financial assistance from the International Monetary Fund (IMF).
IMF support mostly goes hand in hand with the use of a financial mechanism instigated by the EU or the Euro-19, such as the European Financial Stabilisation Mechanism (EFSM), or the European Financial Stability Facility (EFSF).
In our 2015 report entitled ‘Emergency assistance for eurozone countries during the crisis’, we described the various financial assistance programmes and emergency funds deployed. A financial assistance programme entails a series of agreements that the European Commission makes with a member state requesting assistance. The euro-area countries or the Ecofin council (depending on the emergency fund used) have authorised the European Union to make these agreements, after it has consulted with the ECB and (in the majority of cases) the IMF. The euro-area countries or the Ecofin Council respectively decide formally on the launch and the continuation of a financial assistance programme.