Euro zone finance ministers met in Luxembourg on Monday to discuss Spain, Greece, Portugal and other issues related to the region's debt crisis, including what needs to be done to establish a single supervisory authority for euro zone banks.
Following are comments from Eurogroup Chairman Jean-Claude Juncker, European commissioner for economic affairs Olli Rehn and IMF Managing Director Christine Lagarde at the final press conference after the ministers' meeting:
EUROGROUP PRESIDENT JEAN-CLAUDE JUNCKER:
"We were happy to learn that substantial progress has been made over the last weeks. We called on the Troika and Greece to finalize their negotiations and agree on ways to close the fiscal gap for 2013 and 2014 as soon as possible."
"We are also stressed that before the next disbursement, Greece must clearly demonstrate its strong commitment to the program and the 89 prior actions agreed in March should be implemented by the 18th of October at the latest."
"We were reassured by the strong resolve of the Greek government to push ahead with reforms and consolidation, building on the large adjustments already achieved and on the improved competitiveness obtained.
We will of course continue to monitor the situation closely and are ready to reconvene once the review process by the Troika has been completed. I have to add that personally I am impressed by the performance of the Greek government, by the willingness of the coalition parties in Greece to undertake whatever will have to be undertaken to respond to our wishes and to take into account the need nation."
IMF MANAGING DIRECTOR CHRISTINE LAGARDE:
"On Greece, clearly there is progress on the ground. More needs to be done on all fronts - fiscal, structural reforms, financing, debt - clearly we will be working on that that. The mission that is working as part of the Troika is not going to Tokyo. They will be stationed in Athens to do the work that needs to be done.
"On Spain, we are sending our team, just after our annual meeting in Tokyo at the end of next week, for the first monitoring exercise of the financial sector reform which is as we see it from a far is progressing well. "
"On Portugal, I shall be recommending to the board the approval of the review of the Portuguese program so that the dispersement of the IMF tranche can take place"
"On Cyprus, a team will be in Cyprus in the second half of October."
ESM MANAGING DIRECTOR KLAUS REGLING
"On Spain, we are ready to provide the financing to the FROB for the bank recapitalization of Spanish banks, probably starting in November and we are preparing the transfer of EFSF ... to the ESM."
COMMENTS BY EURO ZONE FINANCE MINISTERS AHEAD OF THE MEETING:
DUTCH FINANCE MINISTER JAN KEES DE JAGER
"Greece must find a way out of its crisis through reforms and (fiscal) consolidation. That cannot be done by other countries. They must do that. We are waiting for the Troika report, we can't get ahead of ourselves, but it is really up to Greece to resolve this on its own. That is all important and the ball is in their court. There are risks attached (to the loans to Greece)."
EUROGROUP PRESIDENT JEAN-CLAUDE JUNCKER:
"The start of the ESM marks a historic milestone in shaping the future of the European monetary union. The euro area now is equipped with a permanent and effective firewall, which of course is a crucial component in our strategy to ensure financial stability in the euro zone."
"To a large extent I'm satisfied with the fiscal consolidation measures taken so far by the Spanish government. It is not up to me nor to us as members of the eurogroup to advise the Spanish government to make a request."
ESM MANAGING DIRECTOR KLAUS REGLING:
"The instruments of the ESM are the same as the instruments of the EFSF, namely country program loans under full adjustment, precautionary arrangements, interventions on primary and secondary market and bank recapitalization via the treasury of a country. Those are the instruments of the EFSF and those are also the instruments of the ESM.
For the ESM, our body is in the process of looking at the option of inserting this tool (of leveraging first loss guarantee) also in the ESM framework but this has not yet happened so far. My expectation is it will but it has not happened so far."
IRISH FINANCE MINISTER MICHAEL NOONAN
On direct recapitalization of banks by the eurozone's permanent rescue mechanism, the ESM:
"The policy position as set out by the heads of state and government on the 29th of June is the policy that prevails. We have had assurances of that from the (European) Commission and from the European authorities."
EUROGROUP CHAIRMAN JEAN-CLAUDE JUNCKER
On idea of single euro zone budget:
"I myself am not opposed in principle to a euro zone budget.
LUXEMBOURG FINANCE MINISTER LUC FRIEDEN
"Spain doesn't need any help at this moment. They didn't ask for any help. I think we should deal with such a request when it comes but so far the Spanish government is undertaking reforms which go in the right direction.
Asked whether Greece needs more time or money
"Greece is doing a lot of efforts. It's very difficult down there. And I think if we need to give them additional time, if that does not require a lot of additional money, we should support Greece. This is not a one-way street. It requires that Greece is undertaking and continues to undertake the reforms which the government is committed to.
On whether funds from the euro zone's permanent rescue fund, the ESM, should be used for banks' legacy problems:
"We shouldn't talk up a new problem every day. This is a subject that needs to be sorted. We should not rule out to do everything possible if we want stability, to check if we can make use of the instruments that we have when something has gone wrong in the banking sector. At least now we have instruments."
AUSTRIAN FINANCE MINISTER MARIA FEKTER
"We like our currency, the euro, and we will not only protect it through the central bank but we will also protect the euro zone, the states when they get into difficulty, through these instruments (ESM).
"We have come a long way towards stability but we are not out yet over our problems. We must stabilize the banks in Spain, see that Greece fulfills its conditions. There will likely be an application from Cyprus. Slovenia has difficulties. We must see that in Europe the debts don't get over our heads.
"We have the banking application from Spain. It has a potential capacity of 100 billion euros. We are likely to hear today that this 100 billion euros is not all needed, that Spain needs significantly less."
GERMAN FINANCE MINISTER WOLFGANG SCHAEUBLE
"Spain needs no aid program. Spain is doing everything necessary, in fiscal policy, in structural reforms. Spain has a problem with its banks as a consequence of the real estate bubble of the past years.
"That's why Spain is getting help with banking recapitalization. And of course Spain, like other countries, is suffering from the problem of contagion, speculation on financial markets... but Spain needs no aid program. That's what the Spanish government says again and again."
"The chancellor is not the troika. The chancellor is travelling to Greece just like she travels to many other European countries and just like the Greek prime minister came to Berlin.
"We have intensive bilateral cooperation to help Greece in building a competitive economy.
"Germany is doing whatever we can do to help Greece on its difficult path. But the troika has a job of its own. It has to report whether Greece is fulfilling the obligations from the second aid program and if the troika can report that then the conditions for the disbursement of the next tranche are given. But that's not on the agenda of the visit in Athens."
On direct banking recapitalization from the ESM
"The agreements will be stuck to. That's what we do with Greece, with Portugal and of course as with the agreement of the heads of state and government of end-June that says that once a European bank supervision has been implemented that then as part of the further conditions direct bank recapitalization is an option but further conditions means an application by the member state in question, an adjustment program that is agreed with the member state and we will talk about implementing a European banking supervision tomorrow. That's harder done than agreed."
(Reporting by Annika Breidthardt, John O'Donnell, Eva Kuehnen, Robin Emmott and Jan Strupczewski in Luxembourg; editing by Luke Baker)