Here are the main points from the draft agreement being considered by eurozone leaders at an emergency summit aimed at providing new aid to Greece and preventing debt contagion:
Committed to ensure euro stability
The recovery in the euro area is well on track and the euro is based on sound economic fundamentals. But the challenges at hand have shown the need for more far reaching measures. We reaffirm our commitment to the euro and to do whatever is needed to ensure the financial stability of the euro area as a whole. We also reaffirm our determination to reinforce convergence, competitiveness and governance of the Euro area.
New Greek bailout
We agree to support a new programme for Greece and to provide an additional amount of up to (figure yet to be determined). This programme will be designed, notably through lower interest rates and extended maturities, to decisively improve the debt sustainability and refinancing profile of Greece. We call on the IMF to contribute to the financing of the new Greek programme in line with current practices.
We have decided to lengthen the maturity of the EFSF (European Financial Stability Facility) loans to Greece to the maximum extent possible from the current 7.5 years to a minimum of 15 years
'Marshall Plan' for Greece
We call for a comprehensive strategy for growth and investment in Greece. Structural funds should be re-allocated for competitiveness and growth under a European 'Marshall Plan.' Member States and the Commission will mobilise all resources necessary in order to provide exceptional technical assistance to help Greece implement its reforms."
Greece is in a uniquely grave situation in the Euro area. This is the reason why it requires an exceptional solution. The financial sector has indicated its willingness to support Greece on a voluntary basis through a menu of options (bond exchange, roll-over, and buyback) at lending conditions comparable to public support with credit enhancement
Eureo Nations Pledge
All other Euro countries solemnly reaffirm their inflexible determination to honour fully their own individual sovereign signature and all their commitments to sustainable fiscal conditions and structural reforms. The Euro area Heads of States or Government fully support this determination as the credibility of all their sovereign signatures is a decisive element for ensuring financial stability in the Euro area as a whole.
EFSF crisis fund boost
To improve the effectiveness of the EFSF and address contagion, we agree to increase the flexibility of the EFSF, allowing it 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
- 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
We welcome the progress made on the implementation of the programmes in Ireland and Portugal and reiterate our strong commitment to the success of these programmes. The EFSF lending conditions we agreed upon for Greece will be applied also for Portugal and Ireland.
All euro area member states will adhere strictly to the agreed fiscal targets, improve competitiveness and address macro-economic imbalances. Deficits in all countries except those under a programme will be brought below 3.0% (of Gross Domestic Product) by 2013 at the latest.
In this context, we welcome the budgetary package recently presented by the Italian government which will enable it to bring the deficit below 3.0% in 2012 and to achieve a balanced budget in 2014.
We also welcome the ambitious reforms undertaken by Spain in the fiscal, financial and structural area. As a follow up to the results of bank stress tests, member states will provide backstops to banks as appropriate.
We look forward to the rapid finalisation of the legislative package on the strengthening of the stability and growth pact and the new macro economic surveillance. Euro area members will do their utmost to help reaching agreement with the European Parliament on voting rules in the preventive arm of the pact.
Reducing credit agency influence
We agree that reliance on external credit ratings in the EU regulatory framework should be reduced, and look forward to the Commission proposals in this respect
We invite the President of the European Council, in close consultation with the President of the Eurogroup, to make concrete proposals by October on how to better organise crisis management in the euro area and improve working methods.