21.7.2011
By Simon Miller
European leaders will call on a “Marshall Plan” for the Eurozone according to a leaked draft agreement.
The communiqué calls for a “comprehensive strategy for growth and investment in Greece” with structural funds re-allocated for competitiveness and growth under a European Marshall Plan.
It adds: “Member states and the Commission will mobilise all resources necessary in order to provide exceptional technical assistance to help Greece implement its reforms.”
According to the document which was leaked to The Daily Telegraph, the deal also lengthens the maturity of the European Financial Stability Fund (EFSF) loans to Greece to the maximum extent possible from the current 7.5 years to a minimum of 15 years.
The Eurozone will provide EFSF loans at lending rates equivalent to those of the Balance of Payment facility (currently approx. 3.5%) without going below the EFSF funding cost and the lending conditions will also apply to Ireland and Portugal.
In addition, the EFSF will be allowed to: intervene on the basis of a precautionary programme, with adequate conditionality; finance recapitalisation of financial institutions through loans to governments including in non programme countries; and intervene in the secondary markets on the basis of an ECB analysis recognising the existence of exceptional circumstances and a unanimous decision of the EFSF Member States.
The draft statement also commits to introducing legally binding national fiscal frameworks by the end of 2012 and agrees that reliance on external credits ratings in the EU regulatory framework should be reduced.
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