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Third review mission: Cyprus’ economic programme on track
Staff teams from the European Commission (EC), European Central Bank (ECB), and the International Monetary Fund (IMF) visited Nicosia during 29 January-11 February 2014 for the third review of Cyprus's economic programme, which is supported by financial assistance from the European Stability Mechanism (ESM) and the IMF. Cyprus’ programme remains on track, with the macro-fiscal situation better than expected. Fiscal targets for 2013 have been met with considerable margin, due to both prudent budget execution and a less severe than anticipated recession. The financial sector is also showing signs of stabilisation, although the authorities still need to put in place a debt-restructuring framework and ensure that banks and coops effectively implement their restructuring plans. The outlook remains challenging. Unemployment is stubbornly high and output is projected to contract by 4.8% in 2014. A return to positive but modest growth of around 1% is expected in 2015. Approval of this review by the EU and IMF by early April would pave the way for the disbursement of EUR 150 million by the ESM and about EUR 86 million by the IMF.
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| The support programme […] enable[s] Cyprus to restore the health of the economy and to create a more sustainable economic model. |
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Olli Rehn, Vice-President for Economic and Monetary Affairs and the Euro
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Commission-IMF teams find Romanian programmes on track as economy recovers
Teams from the European Commission and the International Monetary Fund (IMF) visited Bucharest during 21 January-4 February to conduct discussions on the combined first and second reviews under the IMF Stand-By Agreement and on the status of Romania’s precautionary balance of payments programme with the EU. The teams concluded that the programme remains broadly on track. Most end-December performance criteria have been met and structural benchmarks have either been met or are near completion. In 2013, Romania’s real GDP growth rate picked up to an estimated 2.8%, on the back of continued strong exports, while domestic demand remained subdued. In 2014, real GDP is projected to advance by 2.2% with domestic demand firming on the basis of a supportive policy framework, better absorption of EU funds, and an improvement in confidence.
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New indicator: seasonally adjusted government deficit down to 3.1% of GDP in euro area, nearly stable at 3.5% in EU
In the third quarter of 2013, the seasonally adjusted general government deficit to GDP ratio stood at 3.1% in the euro area, down from 3.3% in the second quarter of 2013. In the EU the deficit to GDP ratio remained nearly stable at 3.5%. These figures were released on 3 February by Eurostat, the statistical office of the European Union. It is the first time that Eurostat has published working day and seasonally adjusted quarterly data on government revenue, expenditure and surplus/deficit. This new indicator captures the short-term trend in general government revenue, expenditure and surplus/deficit for the euro area and the EU. It thus complements the annual data already published in semi-annual Excessive Deficit Procedure notifications and the quarterly news release on government debt. Data will be published regularly approximately four months after the end of each reference quarter.
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Unemployment rate at 12.0% in euro area, 10.7% in EU
The euro area seasonally-adjusted unemployment rate was 12.0% in December 2013, remaining stable since October. It was 11.9% in December 2012. The EU unemployment rate was 10.7% in December 2013, down from 10.8% in November. It was 10.8% in December 2012. These figures were published on 31 January by Eurostat, the statistical office of the European Union. Eurostat estimates that 26.2 million men and women in the EU, of whom 19 million were in the euro area, were unemployed in December 2013. Compared with November 2013, the number of unemployed persons decreased by 162,000 in the EU and by 129,000 in the euro area. Compared with the previous year, December 2012, unemployment decreased by 173,000 in the EU28, but increased by 130,000 in the euro area. The lowest unemployment rates were recorded in Austria (4.9%), Germany (5.1%) and Luxembourg (6.2%), and the highest in Greece (27.8% in October 2013) and Spain (25.8%). Compared with a year ago, the unemployment rate increased in fourteen Member States, fell in thirteen and remained stable in Sweden.
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Commission presents first EU Anti-Corruption Report
Corruption affects all EU Member States and costs the European economy around EUR 120 billion per year, yet the results of anti-corruption measures by Member States are uneven. These are some of the conclusions from the first ever EU Anti-Corruption Report published on 3 February by the European Commission. The report shows that both the nature and level of corruption, and the effectiveness of measures taken to fight it, vary from one Member State to another, but that corruption deserves greater attention in all Member States. Included with the report are the results of two Eurobarometer surveys on the perception of corruption amongst European citizens and companies. The citizen survey shows that three quarters (76%) of Europeans think that corruption is widespread and more than half (56%) think that the level of corruption in their country has increased over the past three years. The Commission intends to work with Member States to implement the suggestions made in the report and share best practice. The next EU Anti-Corruption Report will be issued in two years.
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ECB makes progress with asset quality review, confirms stress test parameters for comprehensive assessment
On 3 February, the European Central Bank (ECB) announced progress made in its on-going comprehensive assessment of bank asset quality. For the stress test, it also confirmed that it will apply the parameters released by the European Banking Authority (EBA) on 31 January: the capital thresholds for the baseline and adverse scenarios will be 8% and 5.5% Common Equity Tier 1 capital respectively. The stress test will incorporate the results of the asset quality review (AQR) and is an integral part of the comprehensive assessment. The assessment aims to enhance the transparency of the balance sheets of significant banks and to rebuild investor confidence prior to the ECB taking over its supervisory tasks in November 2014.
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European Investment Bank providing further support to local authorities in Greece
The European Investment Bank (EIB) is providing further support to local authorities in Greece, with EUR 50 million advanced to the Consignment Deposits & Loan Fund (CDLF). This is the second and final tranche of a EUR 100 million framework facility that provides financing to local authorities in Greece through the CDLF. The facility enables the local authorities to invest in key sectors for growth, jobs and quality of life, such as transport, educational infrastructure, cultural and historic heritage and rehabilitation of public buildings, environmental improvement, energy efficiency and tourism infrastructure.
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| Directorate-General for Economic and Financial Affairs |
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