Meeting of Heads of State and Government of the euro zone

The Minister of Economy, Finance and Industry presented a paper on the meeting of Heads of State and Government of the euro zone.

The Heads of State and Government of the euro area and the institutions of the European Union met Thursday, July 21, 2011 to define a response to the crisis of the Greek sovereign debt and stop the contagion. With the impetus provided by the agreement reached yesterday by the President of the Republic and the German Federal Chancellor, several major decisions were taken.

Countries in the euro area in the first place decided to give their full support to Greece.

The Heads of State and Government of the euro area agreed on a new plan of aid to Greece for a total of € 109 billion provided by the European Union and the International Monetary Fund by 2014. Public funding will be supplemented, in exceptional cases, a substantial contribution by the private sector.

Furthermore, the Greek debt sustainability is enhanced by the new modalities of intervention of EU aid: a lengthening of maturity of new loans to Greece (from 7.5 to at least 15 years) rate conditions significantly more favorable, and finally, the possibility of redemption of debt to reduce its weight and lower interest expense.

The new aid program is accompanied by the establishment of an ambitious strategy for growth and investment in Greece, which will require a strong mobilization of structural funds and the intervention of the European Investment Bank to enable the country to regain competitiveness and growth needed in the long term.

Countries in the euro area in second place with increased resources to fight against infection.

The new powers of the European Financial Stability Fund (EFSF) will enable it to fight more effectively against the risks of contagion or irrational markets. The EFSF will be able to intervene as a precaution. It may participate in the recapitalization of financial institutions through loans to governments, including in countries without a program.Finally, the EFSF can intervene directly in the secondary markets sovereign debt, to avoid contagion. A draft supplementary budget for the implementation of these decisions by France will be submitted to Cabinet on 1 August.

Rates and loan repayment arrested in Greece will also be applied to Portugal and Ireland (who decided to participate constructively in discussions on tax policy), to support the recovery of these countries .

The Heads of State and Government finally called for the rapid development of the legislative package on strengthening the Stability Pact, to reduce dependence on rating agencies and strengthening the governance of the area euro.

The commitment of France alongside Greece, through the guarantees that it will bring to EFSF to enable it to raise the money needed to finance the country, will be recorded in the gross debt of the state as in the all other participating States. Thus, the gross debt of France is projected to increase by 2014 in an amount estimated at around € 15 billion.